Economic stability<\/p>\n
It should have been a surprise to big speculators to find out
\nthat the Indonesian financial market had not been jolted by wild
\nfluctuations during the violence-marred election campaign.<\/p>\n
In fact, according to market analysts, several currency
\nspeculators had suffered big losses due to the strengthening of
\nthe rupiah immediately after the May 29 election. Many traders,
\nworried by the wave of campaign-related violence and rumors of
\npolitical instability had shifted heavily from the rupiah to the
\ndollar, hoping to rake in big gains a few days after the
\nelection.<\/p>\n
But the speculators were burned because the market remained
\nfairly stable last month even during the hurly-burly of the
\ncampaign month. The rupiah rate did not fluctuate outside the 8
\npercent exchange rate band (Rp 2,407-Rp 2,600 to the American
\ndollar) set by the central bank. The rupiah did weaken from Rp
\n2,364 in January to Rp 2,437 in early May and Rp 2,444 on the eve
\nof the election. But it immediately recovered to Rp 2,407 the day
\nafter the election. The rupiah closed yesterday at Rp 2,428.
\nLikewise, investors' confidence also prevailed in the Jakarta
\nStock Exchange, as shown by the narrow movement of the stock
\nprice index.<\/p>\n
The financial market stability should be attributed largely to
\nthe right monetary management of the central bank and the sound
\nfundamentals of the economy. Surely, the widening of the rupiah's
\nexchange rate band late last year to 8 percent has served as a
\ndeterrent to excessive speculation. Had it not been for the wider
\nintervention band, the rupiah market would have been much more
\nvolatile due to short-term jitters which are usually highly
\nrampant a few weeks before the election.<\/p>\n
The timely announcement of reliable information on key
\neconomic indicators by the government also makes market players
\nand businessmen more comfortable and enables them to make
\nrational analyses despite the highly active political rumor mill.<\/p>\n
Last week's disclosure of another package of economic reform
\nmeasures to be launched this month further contributed to the
\npositive sentiment of the country's long-term economic prospects.
\nThe forthcoming deregulation package is giving the right signal
\nthat the government will remain consistent with its market-based
\neconomic management.<\/p>\n
The 1997 Global Competitiveness Report of the Geneva-based
\nWorld Economic Forum issued 10 days ago, which promoted Indonesia
\nfrom the 30th to the 15th rank among the 53 developed and
\ndeveloping countries surveyed, served as another international
\nendorsement of Indonesia's macroeconomic policies. Though many
\ninternational economists have debated the viability of the
\ncompetitiveness ranking, the inclusion of Indonesia on the list
\nis positive. It shows a relatively easy access to data and
\ninformation on the Indonesian economy, thereby facilitating
\nreasonable risk calculations.<\/p>\n
Golkar's landslide victory in last week's general election
\ncame as another guarantee that macroeconomic policies will be
\nmaintained in the right direction. Barring any widespread violent
\nprotests against the final election results which are expected to
\nbe announced tomorrow, business will continue as usual.<\/p>\n
But economic stability can only be sustained if the government
\nseriously considers and translates the mainstream aspirations of
\nthe people aired during the election campaign into concrete
\nprograms of action. Whether the country can sustain its economic
\ndynamism depends on the ability and willingness of the government
\nto allow people to be innovative and speak their minds and give
\nthem a platform for entrepreneurial spirit to thrive.<\/p>\n
The nation's economic development has reached the stage where
\npolitical reform and a highly accountable government or good
\ngovernance have become a precondition for sustaining growth.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/economic-stability-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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