South Sumatra Will Grow 5.5%

The Head of the Bank Indonesia for South Sumatra, Hamid Ponco Wibowo, said the factors supporting the economic growth will make the outlook for South Sumatra better than 2016.

“Next year, there will still be many new projects or continued projects from the government that will make investment grow. In addition, the trend in better commodity prices will continue and can push South Sumatra's export", he said during the Bank Indonesia annual meeting on Monday (December 19).

Ponco said that the government is ready to play a role in creating investment growth through various infrastructure projects, while government consumption is believed to accelerate.

“The increase in government consumption is in line with the improved acceptance of transfers from the central government after implementation of the tax amnesty”, he said.

Meanwhile, from the side of the improvement in export performance, Ponco is optimistic that the projection is not separated from the factors of increasing trend of plantation and mining commodity prices, which are South Sumatra's mainstays. The mainstays of the region are palm oil, rubber and coal.

From the global aspect, he stated, export recovery will also be supported by the conditions of the global economy that show improvement, one of which is the United States.

However, the central bank still considers that exports will still face a challenge due to the condition of the Chinese economy that is South Sumatra's main export market and is currently still in the process of balancing.

“In the future, the global risk still needs to be watched, especially related to the US fiscal and trade policies, and the balancing process of the economy and remedying of the Chinese financial sector”, he explained.

Ponco added that other factors supporting the economic growth of South Sumatra next year are the processing industry.

According to him, the processing industry sector has the potential to experience growth improvements in line with the plan to operate Southeast Asia's largest paper and paper material processing factory.

“The paper processing factory is planned to be operational in March 2017, complementing the construction of other strategic infrastructure projects in South Sumatra”, he said.

Based on the records of the central bank, the processing industry has contributed quite highly to the economy of South Sumatra, which was seen during the period of Q3/2016.

During that period, the processing industry grew by 7.46% (yoy). Most of the growth in the sector came from the rubber, vegetable oil, non-metallic mineral goods and food and drink processing industries.

SUPPORTED BY NRD

During the same opportunity, Ponco explained that the prospect for South Sumatra's better economic growth is also supported by the abundance of natural resources (NRD) in the province.

According to him, South Sumatra is the largest rubber producing province in Indonesia with a production of 0.95 million tons or 30% of national rubber production.

“Meanwhile 70% of South Sumatra's exports and 63% of portion of household consumption against South Sumatra's PDRB are very dependent on the performance of that commodity”, he said.

He continued the potential for NRD is still added to by South Sumatra's successful experience in becoming the host for national and international scale activities.

“The potential as the place of implementation for MICE continues to be maximized with infrastructure construction especially that supporting the 2018 Asian Games, such as roads, bridges and accommodation facilities”, he stated.