Economic data underestimates real conditions, says CSFB

JAKARTA (JP): London-based investment bank Credit Suisse First Boston (CSFB) claims Indonesia's official economic data does not reflect the real conditions of the country's improved economic activities.

In its latest issue of "Emerging Markets Economics Research" on the Indonesia Economic Outlook section, CSFB said in general they were more optimistic than what was said by the country's current official economic data following the economic crisis.

"We are more convinced than ever that the official data exaggerated the extent of the downturn in Indonesia," the report said.

The report was released on Wednesday at the media briefing during the four-day international investor forum sponsored by the CSFB in cooperation with state-owned PT Danareksa Sekuritas.

The forum -- held from Monday through Thursday -- invited some 50 overseas fund managers to meet with Indonesian corporate leaders and government officials and to assess investment opportunities in Indonesia.

In the report, CSFB said private consumption had picked up as was evident in motorcycle sales which grew 55 percent to 34,585 from the previous year ending in May.

Cement consumption for the period of January through May had also begun to rise and was running at about 74 percent of the pre-crisis level (January-May period in 1997), according to the report.

"Cash transactions are difficult to track, and can be missed by official statistics," the report said, adding this was one reason why it suspected that the level of economic activity had been understated by the official data.

The company's executive Neil Harvey, commenting on Indonesia's interest rate downturn trend and rupiah appreciation, said he was optimistic that the country would have a lot more debt restructuring deals ahead.

Lowered interest rates give incentives to corporations to restructure debt, while bankers see improving credit worthiness in their borrowers, Neil said.

He said, however, the debt restructuring in the state bank sector was too slow compared to the private bank sector.

"State banks have a larger scale of problems in which they extended loans in much bigger sums and to more uncooperative parties," he said.(udi)