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[News] More Private Investment Will Be Needed In Indonesia
Posted at: 23 August 2017

Indonesia's $932 billion gross domestic product grew 5 percent in real terms last year. The World Bank projects it to increase to 5.2 percent this year and 5.3 percent in 2018. This certainly needs more boost since President Joko Widodo has pledged to prioritize infrastructure development. 

The government has allocated Rp 387.3 trillion for infrastructure in the 2017 state budget to construct 836 kilometers of roads, 10,198 meters of bridges, 13 airports, 61 ports and three bus terminals. 

Unfortunately the state budget can only cover Rp 1,500 trillion ($112.58 billion), or less than a third of Rp 4,900 trillion required for the 225 strategic projects that the president promised to complete by 2019. Thus more private investment will come. To face this, industry experts, who have been studying the disadvantages and advantages of outsourcing, feel that the future of outsourcing will continue to remain secure mainly due to the various benefits that outsourcing brings both to the buyer and the offshore provider. 

The benefits of outsourcing are manifold- the most important being cost-effectiveness and better infrastructure, and this has led to its sustained growth.

One of the major benefits of outsourcing in the early years was the vast difference in cost. Companies were able to reduce their overall expenditure considerably by paying less than half the usual amount in salaries to their offshore outsourcing partners.