UPDATE 2-Indonesian leader vows 'massive deregulation' to win investment

* Widodo tries to lift negative investor sentiment

* Indonesia is ‘racing against time’ - president

* 160 regulations identified as hurting investment

* Some laws will be amended to improve climate (Updates industries involved, number of regulations)

By Wilda Asmarini

JAKARTA, Sept 2 (Reuters) - Indonesia’s government on Wednesday promised quick and “massive deregulation” in manufacturing, trade and agriculture to attract much needed investment in Southeast Asia’s largest economy.

The measures are part of a stimulus package being finalized this month by President Joko Widodo in a bid to improve investor sentiment, which has soured due to slowing domestic consumption, China’s downturn and weak commodity prices.

“We need to carry out massive deregulation and introduce new regulations that will really create a good climate for the economy as soon as possible,” Widodo said in a cabinet meeting. “We are racing against time.”

Chief economic minister Darmin Nasution said 160 regulations were identified as being negative for investors.

The president and cabinet ministers plan to review these regulations in marathon meetings over the next few days to decide which ones to eliminate.

“As a consequence we will meet continuously in Bogor starting from tomorrow,” Nasution said, referring to a city near the capital where the administration often meets. “If we need to sleep overnight there, we will sleep overnight there.”

The stimulus package will also include tax holidays and a new import policy for beef, an important source of protein in the Indonesian diet.

The mining sector was not among the industries being targeted for deregulation, Nasution said. The government was instead looking at how to provide incentives to accelerate smelter developments.

Widodo, a former furniture salesman who became the governor of Jakarta before winning the presidency, also promised to work with parliament to tweak laws seen as obstacles to investment.

“I want there to be revisions to laws that hinder anything, be it goods, services procurement or the investment climate,” he said.

Since taking office last October, the president has constantly sought to reassure investors, going as far as inviting them to call him personally if they run into any problems.

But political infighting, red-tape and endemic graft have blocked any significant reforms.

Indonesia needs private investment to provide most of the money required to build major infrastructure projects.

The investment board has estimated the country needs 3,518 trillion rupiah ($249.33 billion) of investment from both domestic and foreign sources to achieve its 7 percent annual economic growth target.

Growth this year is likely to be less than 5 percent, the lowest since 2009. ($1 = 14,110 rupiah) (Additional reporting by the Jakarta bureau; Writing by Randy Fabi; Editing by Richard Borsuk and Simon Cameron-Moore)