World Bank: Political Chaos Disrupts Investments in Indonesia

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  • TEMPO.CO, Jakarta - The World Bank's chief economist for Indonesia, Ndiame Diop, said that domestic political instability could lead to bad precedent for Indonesia's future economic growth.

    According to Diop, political situations should be able to provide certainties for all businesses. But what has happened in the past week is just the opposite; Indonesia's political elites continue to make maneuvers that cause investors to worry.

    "If this continues, it will interfere with future investment," Diop said in Jakarta yesterday.

    He said that the Indonesian economy will still be influenced by global sentiment. Therefore, investors need political stability as a guarantee for their investments. "That's why [political strives] must immediately stop so that growth is maintained, "he said.

    The World Bank yesterday said that, compared to other countries in the Asia Pacific region, Indonesia's economic growth has shown a downward trend. In its East Asia-Pacific Economic Update review, the bank says that Indonesia's economy is expected to only grow by 5.2 percent, slower than last year's 5.8 percent.

    World Bank Vice President for East Asia and the Pacific, Axel van Trotsenburg, said Indonesia's economic growth decelerates with commodity price declines, low government spending, and the slow pace of credit expansion. Ahead, he said, Indonesia would have difficulties competing with other countries, as it pins all hopes on commodity exports, whereas prices are down.