Indonesia VP sees economic growth at 8-9 pct in '10

JAKARTA, May 27 (Reuters) - Indonesia's economic growth could touch 8-9 percent in 2010 from 6.4 percent forecast in the state budget this year spurred in part by infrastructure development, vice president Jusuf Kalla said on Tuesday.

Southeast Asia's biggest economy badly needs investment, especially in infrastructure, to push economic growth and reduce unemployment which currently stands at around 9 percent.

Kalla said the government would have more room to develop the country's rusting infrastructure by having a lower subsidy bill. The government this month raised subsidised fuel prices by an average of about 29 percent to reduce hefty subsidies.

"All our subsidies would be reduced. We will, therefore, have extra savings," Kalla told an investment forum. "I can tell you that in 2010 it would be very easy to make it 8-9 percent."

Soaring global oil prices have forced Indonesia to spend billions of dollars on fuel subsidies, but investment on infrastructure has been relatively small.

As part of its efforts to attract investment, the government plans to offer 200 projects worth about $19 billion in sectors such as infrastructure, mining and tourism in the vast archipelago with a population of about 226 million.

The projects include an $81,000 cattle breeding project in Central Sulawesi province, a $4 billion oil refinery project in Banten province, a $27 million artificial lake in Riau province and a $204 million geothermal power plant in Central Java.

Other projects include development of a $2.75 billion special economic zone in East Kutai regency in East Kalimantan province and a $308 million railway project in Riau province.

Adam Sack, country manager of the International Finance Corporation (IFC) Indonesia, the private-sector lending arm of the World Bank, said the government would need to accelerate reforms to attract investors.