Private consumption is expected to quicken in 2013, fueled by rising employment, a 30% increase in average minimum wages, a 7% rise
in public service wages, and a tax break from January 2013, when the government raised the income threshold at which income tax is payable.
With parliamentary elections sche...
duled for April 2014 and a presidential election in July 2014, election-related spending is likely to contribute to
consumption from the second half of 2013. A consumer survey conducted by Bank Indonesia in February 2013 showed an upturn in consumer
confidence from a dip late last year (Figure 3.24.12).
Investment, both private and public, looks likely to maintain healthy expansion. Support for this projection comes from the upgrades in
sovereign credit ratings, lower interest rates, increased budget allocations for infrastructure, and a lengthening record of good GDP growth. A
$2.7 billion expansion by auto maker Toyota over the next 4 years is one of several large FDI-funded investments planned. Businesses planned significant increases in investment in the first half of 2013, according to a survey late last year.
Public investment will benefit from a 55% increase in the 2013 budget allocation for infrastructure, even though the outcome will likely fall short of that target because of chronic delays in the execution of budget projects. With this in mind, the government is directing state-owned enterprises to become more involved in building infrastructure and is
making concerted efforts to accelerate budget execution.
The government took two other steps last year to overcome obstacles to infrastructure development: First, it issued implementing regulations for the new land-acquisition law passed by Parliament in December
2011, which provides more certainty in the resolution of land acquisition for infrastructure. Second, it established a viability gap fund to support public–private partnerships. This year, officials are reviewing investment regulations, including the list of industries currently closed or only partly open to foreign investment.
a) From a quarterly Statistics Indonesia survey of business executives.
b) From a quarterly Statistics Indonesia survey of middle-and upper-income households.
c) From a monthly Bank Indonesia survey of households.
A score above 100 means that respondents are optimistic and vice versa.
Source: Asian Development Outlook
database - http://www.adb.org/sites/default/files/pub/2013/INO.pdf
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