Business confidence index shows recovery

Business confidence index shows recovery

The Jakarta Post , Jakarta

Business confidence recovered in April and May due to the
relatively peaceful legislative elections, with corporate leaders
becoming increasingly convinced that the government will be able
to maintain order during the presidential election, a survey
says.

Danareksa Research Institute's business sentiment survey said
the business sentiment index (BSI) climbed 0.6 percent to 113.4
in April and May as a result of a 1.2 percent increase in the
expectation index (EI) to 119.8.

"On the back of improved sentiment regarding the country's
sound recovery prospects was the absence of violence during the
legislative campaign in March. The peaceful campaign sets a
positive precedent for the upcoming presidential election," the
survey said.

The survey was based on responses from some 700 CEOs and
directors of leading companies in a range of sectors from
construction to tourism.

A figure of 200 represents the most optimistic outlook. If the
index is below 100, it means that pessimism outweighs optimism. A
figure of 0 signifies the most pessimistic response possible.

Despite rising confidence, however, the corporate leaders had
doubts about business expansion.

"Businesspeople were uncertain if sales could perform well at
a time when legislative election news dominated everything on a
day-to-day basis, irrespective of their stronger confidence in
the nation's recovery in the making," it said

The uncertainty, coupled with upward cost pressures, had
caused sentiment indices that gauge corporate progress to
decline.

However, the survey said, business prospects from June to
November remain sound. CEOs felt upbeat on their company
prospects, and expected their sales growth to accelerate, thus
generating stronger cash flows and higher profits.

They were also convinced that the government was still
effective in managing the country during the presidential
election, as reflected by the rise in the government index (BCGI)
to 88.9 from 88.6, the survey said.

The CEOs believed the presidential election would not derail
the business recovery process in the making, as the government
had shown itself better at controlling security.

"Should the presidential election pass without commotion,
vigorous business momentum shall return," it said.