Consequences of high interest rates<\/p>\n
This is not the first time the government has followed a
\npolicy of raising bank interest rates. When the government in
\nAugust last year abandoned the intervention band that allowed the
\nrupiah's value against the U.S. dollar to fluctuate within
\ncertain limits, then Bank Indonesia governor J. Soedradjad
\nDjiwandono warned the community that it should be ready to accept
\nwhatever risks the move might bring. It is therefore natural that
\nall parties concerned, businesspeople included, should accept
\nhigh interest rates as one of those consequences.<\/p>\n
In order to counterbalance the community's present tendency to
\nkeep money circulating outside the banking system -- to the tune
\nof trillions of rupiah -- the government is correct in adopting a
\nstrategy of setting such high interest rates on bank deposits.
\nDepositors will naturally welcome such relatively high interest
\nearnings while their money is kept safely in local banks.<\/p>\n
Another positive effect is that foreign investors,
\nparticularly fund managers, will be eying Indonesia again as an
\ninvestors' paradise. This poses a challenge for the ministers of
\nthe present Seventh Development Cabinet, who must be able to
\nmaintain a proper equilibrium so that the incoming funds may be
\nproperly allocated as direct investments, at least in the longer
\nterm, in productive sectors.<\/p>\n
In the absence of a conducive business climate and without
\nefforts to establish a clean and reputable government as part of
\nour economic and political reform measures, it is to be feared
\nthat the resulting capital will be of a temporary and short-term
\nnature, and aimed at reaping immediate profits only.<\/p>\n
-- Bisnis Indonesia, Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/consequences-of-high-interest-rates-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }