Crisis fall-out limited to stock market: Experts
Indonesia is likely to be saved from the worst effects of the global financial crisis due to its very limited engagement with the world’s financial system, according to a panel of experts quoted by Kompas on Saturday.
The Kompas panel of economists consisted of respected independent analyst Faisal Basri, Bank BNI economist Tony Prasetiantono, banking and financial markets analyst Mirza Adityaswara and business leader Erwin Aksa Makmud, head of the Young Indonesian Businessmen’s Association (HIPMI).
They commented that the nature of the crisis facing Indonesia was vastly different to that the US has to deal with, along with Europe and other developed nations. The crisis in Indonesia was limited only to the stock market, in which only around 1% of Indonesians had an interest.
The very small role of the stock market in Indonesia’s financial system was also believed capable of insulating the latter from any knock-on effect, they agreed.
Separately, Vice President Jusuf Kalla made similar comments. “The difference is that we are very dependent on our domestic market while in the US the influence of the stock market is up to 1.5 times their gross domestic product,” he said. “Here the influence is only 20%.”
The crisis in the Indonesia Stock Exchange was severe enough for it to remain closed on Friday, despite earlier hopes that it could be re-opened. The market was closed on Wednesday morning after falling more than 10% to a two-year low in morning trading.
The Jakarta composite index lost around 20% of its value during the week, closing at 1,451.67 points. The rupiah closed at 9,935 to the dollar Friday after briefly touching 10,000 during the day.
Suherman Santikno from Batavia Prosperindo told Agence France-Presse that the market was set for a rough time when it does reopen.
Indonesian investors will be nervously looking to the US for their lead if markets open as expected Monday, aware that big drops could be in store after a five-day hiatus, he said.
"If the irrational market continues and persists until next week like we've see in the last few days, there will be falls in all sectors across the board," Santikno said.
The fate of Indonesia’s richest family, the Bakries, appeared to be at stake only months after they were reported by GlobeAsia magazine to top the country’s “rich list” with assets worth $9 billion.
Reports suggested they were desperately trying to sell a 35% share in the jewel of their crown, PT Bumi Resources, for around $1.7 billion, in an effort to raise cash to meet debt payments, but the sliding share prices were undercutting the price they hoped to gain.
The government admitted that the crisis would have its toll on growth, with Finance Minister Sri Mulyani Indrawati telling a press conference Thursday the government had revised downward its 2009 economic growth projection from 6.3% to around 6%.
President Susilo Bambang Yudhoyono was actively working to reassure markets that Indonesia would not see a repeat of the financial melt-down of 1998.
He held a special meeting on Monday to discuss the impact of the global crisis and said he does not see a repeat of the crisis, citing better economic fundamentals and political stability.
A presidential spokesman added Tuesday that the economy is "doing quite well" despite global financial turmoil, with exports crossing $100 billion and forex reserves at their highest level ever.
Dino Patti Djalal said economic growth is robust and the ratio of debt to the GDP has fallen to 35% from as high as 80% during the Asian financial crisis of 1997-1998.
"We are doing quite well. We are achieving the highest growth since the (1997-1998) crisis. Exports have exceeded $100 billion," he told a forum in Singapore organized by the International Institute for Strategic Studies. "Our reserves (are) the highest ever in our history."
The Kompas panel of economists consisted of respected independent analyst Faisal Basri, Bank BNI economist Tony Prasetiantono, banking and financial markets analyst Mirza Adityaswara and business leader Erwin Aksa Makmud, head of the Young Indonesian Businessmen’s Association (HIPMI).
They commented that the nature of the crisis facing Indonesia was vastly different to that the US has to deal with, along with Europe and other developed nations. The crisis in Indonesia was limited only to the stock market, in which only around 1% of Indonesians had an interest.
The very small role of the stock market in Indonesia’s financial system was also believed capable of insulating the latter from any knock-on effect, they agreed.
Separately, Vice President Jusuf Kalla made similar comments. “The difference is that we are very dependent on our domestic market while in the US the influence of the stock market is up to 1.5 times their gross domestic product,” he said. “Here the influence is only 20%.”
The crisis in the Indonesia Stock Exchange was severe enough for it to remain closed on Friday, despite earlier hopes that it could be re-opened. The market was closed on Wednesday morning after falling more than 10% to a two-year low in morning trading.
The Jakarta composite index lost around 20% of its value during the week, closing at 1,451.67 points. The rupiah closed at 9,935 to the dollar Friday after briefly touching 10,000 during the day.
Suherman Santikno from Batavia Prosperindo told Agence France-Presse that the market was set for a rough time when it does reopen.
Indonesian investors will be nervously looking to the US for their lead if markets open as expected Monday, aware that big drops could be in store after a five-day hiatus, he said.
"If the irrational market continues and persists until next week like we've see in the last few days, there will be falls in all sectors across the board," Santikno said.
The fate of Indonesia’s richest family, the Bakries, appeared to be at stake only months after they were reported by GlobeAsia magazine to top the country’s “rich list” with assets worth $9 billion.
Reports suggested they were desperately trying to sell a 35% share in the jewel of their crown, PT Bumi Resources, for around $1.7 billion, in an effort to raise cash to meet debt payments, but the sliding share prices were undercutting the price they hoped to gain.
The government admitted that the crisis would have its toll on growth, with Finance Minister Sri Mulyani Indrawati telling a press conference Thursday the government had revised downward its 2009 economic growth projection from 6.3% to around 6%.
President Susilo Bambang Yudhoyono was actively working to reassure markets that Indonesia would not see a repeat of the financial melt-down of 1998.
He held a special meeting on Monday to discuss the impact of the global crisis and said he does not see a repeat of the crisis, citing better economic fundamentals and political stability.
A presidential spokesman added Tuesday that the economy is "doing quite well" despite global financial turmoil, with exports crossing $100 billion and forex reserves at their highest level ever.
Dino Patti Djalal said economic growth is robust and the ratio of debt to the GDP has fallen to 35% from as high as 80% during the Asian financial crisis of 1997-1998.
"We are doing quite well. We are achieving the highest growth since the (1997-1998) crisis. Exports have exceeded $100 billion," he told a forum in Singapore organized by the International Institute for Strategic Studies. "Our reserves (are) the highest ever in our history."