Perception toward Indonesia's economy better: Analysts

Tuesday, 23 June 2009

The Jakarta Post

 Indonesia could expect a significant jump in investment, in particular coming from overseas, as foreign investors have shown more confidence in the country's economy after it managed to cushion the impacts of the global financial crunch.

 "They see Indonesia as an important market," Paulus Sutisna, the head of Citi's global subsidiaries group in Indonesia, said in an interview last week. "They think the Indonesian economy has an even more promising future."

 Paulus said most of Citi's corporate clients only had good things to say about Indonesia's economy and many were even exploring the possibilities of expanding here.

 "Our clients are happy with the economic situation *in Indonesia*," said Paulus, although he did not mention the names of companies wishing to expand their businesses to Indonesia.

 Even during the height of the global economic turmoil earlier this year, the country performed fairly well in terms of foreign investment.

 According to the Investment Coordinating Board (BKPM), foreign direct investment (FDI) amounted to US$1.97 billion between January and February, a 105.9 percent increase from the $957.2 million posted in the same period last year.

 Indonesia recorded a 4.4 percent economic growth in the first quarter of 2009 from a year earlier, according to the Central Statistics Agency (BPS). Last year, the economy grew by 6.1 percent. "They are also lauding the stable political situation amid the elections," added Paulus.

 The legislative elections conducted in April ran smoothly, with President Susilo Bambang Yudhoyono's Democratic Party garnering 20.85 percent votes, increasing SBY's chances of being re-elected in the July 8 presidential election.

 The Jakarta Composite index jumped 44 percent this year and the rupiah strengthened 6 percent against the dollar, the best performance among Asia's 10 most-used currencies.

 Morgan Stanley said Indonesia's economy might grow by 7 percent by 2011, which would strengthen Indonesia's case for joining the so-called BRIC comprising the world's fastest-growing emerging economies: Brazil, Russia, India and China. Indonesia's economy is expected to grow between 4 and 4.5 percent this year, and between 5 and 6 percent in 2010. "Indonesia's positive growth makes investors look at us more seriously," said Paulus.

 Bank Danamon economist Helmi Arman said he expected an even more robust investment performance in the coming months. "In terms of growth in the region, we are doing relatively better. There should be an improvement *in investment*," he said.

 BKPM head M. Lutfi said he expected investment to grow by about 9 percent this year, a revision from earlier estimates of between 10.7 and 11.2 percent. Helmi also said investors would still be doing business as usual amid the election hype.

"The policies affecting foreign investors *engaging in Indonesia's economy* will not change much regardless of who is elected."