Aditya Suharmoko, Jakarta – The government has promised to provide more attention on reviving manufacturing, service sectors, among the hardest hit by the global crisis last year, in order to provide more employment.
Finance Minister Sri Mulyani Indrawati said that such industries, which provide much employment, needed to be further revitalized in order to help lower the unemployment rate.
"What we need to look at closely is manufacturing industries," the finance minister said last week. "This is our homework. The government keeps making policies to support the growth of manufacturing industries in Indonesia. Revitalizing sugar mills and fertilizer industries are priorities."
The minister said that the government needed to issue new policies to support the manufacturing sector, the main absorber of the employment, in addition to the agriculture and service sector.
Despite the world financial crisis, Indonesia's economy grew at 4.5 percent last year, outstripping the government's target. But several business sectors suffered a decline in growth despite the better-than-expected GDP growth pace.
The manufacturing grew only 2.1 percent as compared to 3.7 in 2008, while the growth in the trade, hotel and restaurant business dived to 1.1 percent from 7.2 percent in 2008. The growth rate in the agriculture, cattle breeding, forestry and fishery sector also fell to 4.1 percent from 4.8 percent, according to the Central Statistics Agency (BPS).
Sri Mulyani said that the government would focus on helping these business sectors this year in an attempt to bolster economic growth and lower the unemployment rate.
The finance minister said the government would provide tax incentives for businesses, particularly high-end manufacturers, by eliminating luxury tax.
Sri Mulyani said the trade, hotel and restaurant sector saw a declining growth because of the contraction in export-import activities.
But she said the sector might have a double-digit growth this year with the expected increase in business activities. "Manufacturing industries are more difficult because they depend on capital spending, investment climate and labor law," she said.
She said many companies had begun to import new production facilities (capital goods) during the fourth quarter of last year to increase production and to improve production efficiency.
Sri Mulyani, however, said that the impact of the purchases of new production would be felt only during the second semester of this year. Mulyani said investment growth might pick up to 7.2 percent this year if banks began channeling loans to the real sector.
The government aims to reduce the unemployment rate to 7.5 percent this year, from 7.87 percent recorded by the BPS in August 2009.