Slow capital disbursement may hinders Indonesia's 2012 GDP growth

Indonesian economists said that slow disbursement of capital spending will remain a big problem in the realization of the state budget next year if the government is still unable to speed up the process, local media reported on Tuesday. The economists said that the slow disbursement of capital expenditure, mainly for the development of infrastructure projects, could affect the government's economic growth target of between 6.6 and 7 percent next year. The government has planned a 19.3 percent increase in capital spending next year to 168.1 trillion rupiah (about 19.5 billion U.S. dollars). However, many analysts said the increase would be useless given the slow disbursement of funds in previous years. Finance Minister Agus Martowardojo recently said that only 26.9 percent, or 37.9 trillion rupiah, of the 140.9 trillion rupiah (16.3 billion U.S. dollars) budget for capital spending this year had been disbursed during the first eight months of the year. "There have not been any steps taken to improve this issue," Anggito was quoted by the Jakarta Post as saying. Indonesia will need about 4,000 trillion rupiah (464 billion U.S. dollars) in investment, mainly in infrastructure, to achieve President Susilo Bambang Yudhoyono administration's ambitious master plan to be among the world's 10 largest economies by 2025.