Business confidence on the rise: Danareksa

The Jakarta Post, Jakarta

Indonesian business confidence rose in the June and July period for the first time since September last year, in the belief that the economy will fare better during the period of August 2003 until January 2004, according to a Danareksa Research Institute survey.

The survey also revealed that the Business Sentiment Index (BSI) rose by 2.1 percent.

The confidence of businessmen in the government, to provide a conducive business climate, also rebounded after sliding consistently since September 2002.

"Rising the fastest in the index measuring business executive index is the government's ability to drive the economy up on the back of a downtrend in the interest rate of Bank Indonesia promissory notes (SBI), which lends hope for loan rates to go down," the survey, which was released on Sunday, stated.

It said, that the continued decline in the SBI rate has presented upbeat expectations for companies to pay lower interest charges, while also offering reasons for bank time deposit holders to convert their deposits into investments in the real sector in an environment that appears safe and orderly.

Against these positive expectations, chief executive officers (CEOs) are adequately convinced that economic recovery will pick up. But the survey added,"without stronger fundamentals, the economic recovery story may end prematurely."

The central bank, thanks to a continued benign inflation, has been slashing its SBI rate, with the current level -- of 8.66 percent -- an all-time low.

The survey included more than 700 chief executives or directors, representing a wide variety of leading companies in various sectors, namely construction, agriculture, finance, transportation and communications, manufacturing and hotel and restaurant services.

The survey is designed to measure CEOs' assessments of the current economy and business conditions, and their expectations for the next six months.