Macroeconomic stability vital for investment<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad said
\nyesterday that the government would continue to pursue
\nmacroeconomic stability to attract more foreign investment into
\nthe country.<\/p>\n
Speaking at the opening of a two-day conference on capital
\nmarket, Mar'ie noted that during last month's rioting in the city
\nthe government was able to maintain macroeconomic stability,
\nwhich helped to pacify stock and money markets.<\/p>\n
\"There has been recovery and I might say that now there
\ntechnically has been a rebound, both in the rupiah value and the
\nindex of capital market,\" Mar'ie said.<\/p>\n
He played down speculation that the aftermath of the riots
\nwould send Indonesia into a financial crisis similar to Mexico's
\nin early 1995.<\/p>\n
He contended that Indonesia, fundamentally, is better off than
\nMexico. \"Yes we have accidents. But still, as we understand, our
\nfundamentals are sound and much better than Mexico's.<\/p>\n
\"I'm still confident about the future of investment in
\nIndonesia, in particular foreign direct investment,\" Mar'ie noted
\nat the conference organized in light of the 19th anniversary of
\nthe Indonesian Capital Market.<\/p>\n
He added that the government is committed to developing
\nIndonesia's capital market to bring about a more efficient
\nallocation of financial recourses.<\/p>\n
Indonesia's equity market has grown relatively fast, with
\ndaily stock trading volume growing from Rp 4 billion (US$1.7
\nmillion) in 1989 to Rp 300 billion today.<\/p>\n
\"Although our capital market is relatively new, we may expect,
\nwith continued improvements and economic progress, it will
\neventually become a major regional market,\" Mar'ie said.<\/p>\n
He added that developing a country's capital market should not
\nbe isolated from the country's overall macroeconomic policy,
\nnoting that macroeconomic stability serves as a prerequisite to
\nattract foreign investment, including portfolio investment.<\/p>\n
Indonesia must maintain extra prudent macroeconomic policy
\nmanagement, along with continued deregulation, privatization, and
\nimprovements in the regulatory system and the institutional
\nframework of the economy.<\/p>\n
\"All of us should commit to foster more improvement of
\neconomic fundamentals,\" Mar'ie said.<\/p>\n
He noted that strong performance of Indonesia's economy in the
\npast had been supported largely by strong macroeconomic
\nmanagement, a more open trade and investment regime and stringent
\nmonetary and fiscal policies.<\/p>\n
The policy of maintaining a realistic and competitive exchange
\nrate, a predictable inflation rate, a manageable current account
\ndeficit and debt service ratio will be continued in the future,
\nhe assured.<\/p>\n
At the micro-level, corporations are expected to commit
\nthemselves to improved efficiency, which \"is the most important
\nprerequisite for their competitiveness\".<\/p>\n
\"In line with maintaining and improving economic fundamentals,
\nthe improvement of the efficiency of Indonesian corporations
\nwould certainly contribute to our international competitiveness,\"
\nMar'ie said.<\/p>\n
With reference to overall macroeconomic policy and stages of
\neconomic development, Mar'ie set out the government's agenda for
\ncapital market development as follows.<\/p>\n
First, Indonesia needs to improve its legal foundation to
\nprovide clarity and certainty for capital market activities and
\ncapital market institutions.<\/p>\n
Second, the market system could be strengthened through higher
\nstandards of financial integrity and a secure market
\nintermediary.<\/p>\n
Third, the promotion of greater transparency and
\naccountability of issuers in meeting international standards of
\ndisclosure and accounting.<\/p>\n
Fourth, improving market efficiency so the true value of
\nissuers is better reflected in securities prices.<\/p>\n
Fifth, making transaction and settlements more efficient to
\nreduce transaction costs and induce more active trading.<\/p>\n
Sixth, issuing measures to increase market liquidity and
\nstrengthen the role of both domestic and foreign investors. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/macroeconomic-stability-vital-for-investment-1447893297",
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"sponsor": "Okusi Associates",
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