Roundup: Indonesian president mulls new economic regime amid global downturn

Indonesian President Joko Widodo said that his government is now attempting to alter the nation's economic regime to productive economy from the old one that he said was very much dependent on consumption.

He said that the old economic regime would be hardly capable of saving the nation's economy amid the current global economic downturn, coupled by the reducing prices on commodities which have been the backbone of the nation's exports.

"We have to enter the downstream era, or industrialization. The world has changed now. Exporting raw commodities, like nickel and bronze, would no longer reliable to spur prosperity like it happened before. The commodity prices have slumped down," President Widodo said in a session with the nation's economy scholars here on Thursday.

Due to that, according to the president, the nation's economy now has been directed to shift from consumption to investment regime to spur production as raw commodity export is no longer reliable.

Regarding that situation, the president said that Indonesia is now facing fundamental economic challenges. He, however, was upbeat that Indonesia can prevail in tackling the challenges.

"That is why the economy is experiencing a slowdown at the moment. We have to understand that it was because we had just ended an economy cycle. We are now directing the economy to a new cycle. So now we are in fundamental economic transition," the president pointed out.

According to the president, who has been in office for eight months, during the transition period the new growth machine has not worked properly yet.

He said that the national economy had actually headed to non- sustainable regime in the last few years. It can be seen from the swelling loans for consumptive purposes up to 20 percent while at the same time the nation's growth only stood at 5 to 6 percent.

"In my opinion, the consumptive loans to purchase motorbikes and cars have been too much," he said.

President Widodo hinted that Indonesia may face harder challenges in the future, but it would be recovered in the following quarters as the economy would be improving.

Indonesia survived from crisis in the late 90s and in 2008 due to high domestic demand, particularly on consumption. It made the nation see positive growth between 5 to 6 percent while the other economies in Asia experienced significant downturns.

The Indonesian government has revised down its growth target this year to 5.2 percent from 5.8 percent initially targeted for this year due to the ongoing global economic downturn.

The nation posted 4.71 percent growth in the first quarter this year, or down from 5.2 percent recorded in the same period last year. Endi