Jakarta's plan for economic boom requires more action and less talk

Indonesia is on the cusp of an economic explosion that could bring untold wealth and certain entry into the BRICS club of leading emerging economies. If only Jakarta could get around to lighting the fuse.

According to the Indonesian government's US$388 billion economic development plan, the country should become the world's 12th-largest economy by 2025, boosting gross domestic product to as high as US$4.5 trillion, compared to US$700 billion last year. Per capita income is also projected to rise to US$16,000 by 2025, compared to US$3,000 today.

This growth will occur through the development of six economic corridors across the sprawling Indonesian archipelago and US$200 billion in infrastructure development.

But where is the money going to come from? President Susilo Bambang Yudhoyono's government says it can provide only a third of the US$200 billion shortfall, and is already handicapped because it has not met the minimum conditions needed to get foreign investors in to build roads, ports, airports, rail lines and other desperately needed infrastructure, let alone domestic private sector investors.

'Poor infrastructure conditions are the main factor preventing Indonesia's economy from growing at its potential rate of 8 per cent. Inadequate infrastructure also results in high inflation compared to most of Indonesia's peers in Southeast Asia,' said a February report by Standard Chartered Global Research.

In addition, a comprehensive study last year by Harvard University in the United States concluded that economic oligarchy and political collusion 'has left Indonesia ill-equipped to respond to the challenge of globalisation'.