JAKARTA. The World Bank says that low-cost green cars (LCGCs) are not the most important thing Indonesia needs to improve its economic performance.
“Indonesia needs more infrastructure investment to support the public,” Said World Bank managing director Sri Mulyani Indrawati in Badung, Bali, on Friday when she was asked about her opinion regarding the controversial LCGC policy.
Mulyani said that a lack of infrastructure had hindered Indonesia in achieving its optimal economic growth. She added that the critical infrastructure condition in Indonesia had also driven up inflation and widened the gap in both the current and trade accounts.
The government recently offered incentives to companies manufacturing LCGCs, which has met strong opposition.
Those who oppose the policy, such as Jakarta Governor Joko Widodo, said that producing LCGC would only increase the number of cars on the streets and cause more traffic jams.
Joko stressed that the government should think about how to improve public transportation and the supporting infrastructure.
The government defended the policy by saying that LCGCs would be specifically designed to consume non-subsidized fuel only and believed this would reduce fuel subsidy spending, which would in turn improve the country’s overall fiscal posture.
