World Bank: The Middle Class Encourages Investment Growth

TEMPO.CO, Jakarta - The World Bank estimates that investment growth in Indonesia may be higher than other Southeast Asian countries because of its large number of middle class people. Jim Brumby, World Bank Indonesia Chief Economist, said that the middle class with their high consumption level attract investors to the country. Brumby encourages the Indonesian government to continue with its reforms by reducing current obstacles such as problems in  land acquisition, bureaucracy and complicated regulations.

"If those problems can be reduced, investment will grow even higher," he said yesterday.

Mahendra Siregar, the Indonesian Investment Coordinating Board (BKPM) chairman, shared the view. He estimated that the growth of the middle class in ASEAN can reach up to 110 percent by 2020, while growth in Indonesia can go as high as 174 percent.

The increase in consumers' confidence also makes Indonesia an investment destination for Japanese investors. For the investment climate to be more receptive a number of regulations must be implemented consistently. "BKPM will simplify the implementation of some regulations to improve the investment climate," said Mahendra.

He added that the investment growth target of 15 percent and Rp 450 trillion of investments was achievable. One of the reasons is because the trend in investment has shifted from primary to secondary industry. "Industries with larger value-added and work force are more desirable," he said.

TRI ARTINING PUTRI | FAIZ NASRILLAH