Tue, 07 Oct 2008
From: Antara News
By Eliswan Azly
Jakarta (ANTARA News) - The financial crisis which has hit the United States has come uncer public spotlight all over the world and causes more impacts on the economy of many countries, Indonesia is no exception.

"I should strongly say that the US condition will not cause any crisis to us, because we had once experienced a worst condition several years ago," President Susilo Bambang Yudhoyono said in a meeting with Bank Indonesia as the central bank, business circles, economic analysts and media editors-in-chief at the state secretariate building here on Monday.

The president`s statement was conveyed as an optimistic expression in facing the impact of economic crisis which has frequently hit Indonesia in the past ten years.

The head of state saw the economic fundamentals of Indonesia is currently much better than that 10 years ago, thus putting this world largest archipelagic country on the list of Asian countries with the worst economic problems.

In 1998, the president stressed that the government`s political transition and mismanagement had triggered an uncertainty which eventually caused panic.

"I dare say make this statement in the hope of being rational in taking decisions, formulating policies and other necessary action," he said.

The president was believed that influential factors which caused the economic crisis to happen in 1997 had to do with inconsistent policies and loss of public confidence.

He was also sure that the present policies, priorities and the the trend of the Indonesian economy were already on the right track, as marked with a better per capital income and declining debt ratio against the gross domestic product (GDP).

On the other hand, economic growth remained in a range of six percent in the past seven quarters. "But we can not underestimate the present condition. We need to be vigilant and improve our caution while jointly managing this country," he said.

In the meantime, Bank Indonesia Governor Boediono said the US financial crisis would however affect Indonesia, but it would never plunge this Asean country into the worst economic crisis as what had happened in 1997/98.

"The 1997/1998 period is different from the present, the banking condition is not the same as the present condition because the epicenter of the past crisis is not here but in the United States," he said.

According to him, the present banking supervision was much better than that of the 1997/98 period and the number of banks was under better control compared to that in the 1997/98 period.

"Banking indicators like CAR which reached 16 percent in August 2008, 3.9 percent of an NPL, and 36 percent of cridit growth constituted a preparation to face the impact of the US economic crisis," Boediono said.


Some steps

In a bid to face the impact of the US financial crisis, there were some steps Indonesia had to take, the president further said.

"It`s our task to get rid of difficult problems to ease the condition," he said.

The first point, the president called on all sides in facing global crisis to continuously promote optimism and mutual cooperation, so that they remain maintaining public confidence.

The second point, a six percent economic growth of Indonesia should be maintained by seeking export and investment opportunities and developing domestic investment.

The third point, according to the president is optimizing the state budget in a bit to generate growth by taking into account social safety net with a number of matters that should be heeded such as infrastructure, poverty handling, availability of electricity, food and fuel oil.

Yudhoyono also stressed that efficiency in the use of the state budget and provincial budget especially for consumptive allocations.

The fourth step had to do with business which could encourages the real sector.

"If it could be done, practically the tax revenues of the state could be maintained including manpower. In the meantime, Bank Indonesia and national banks should build a system for encouraging the credit system," the president said.

Therefore all parties were urged to be more creative in capturing opportunities by developing the markets in neighboring countries of Asia which were indirectly unaffected by the US financial crisis.

In response to the US financial crisis, the Indonesian Chamber of Commerce and Industry (Kadin) called on Bank Indonesia (BI), the central bank, to loosen its tight money policy by changing its policies affecting liquidity.

"BI should change its policy by, for example, reducing the minimum reserves ratio requirement linked to the loan-to-deposit ratio (LDR) and deferring the state debentures (SUN) maturity dates," Kadin chairman Ms Hidayat said on Monday.

He said Indonesia should take anticipatory and preventive steps in the face of the current global financial crisis because Indonesia had relations with other countries.

"The government is required to take immediate and correct actions in order to protect the national economy and business climate from the multiple effects of the global financial crisis," Hidayat said.

Kadin also recommended that the government speed up the spending of the state budget in order to restore liquidity in the financial sector after the withdrawal of SUNs.

BI and the government also needed to reinforce the implementation of the financial sector`s safety net and the role of lenders of the last resort. (*)



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