Fitch ups RI rating outlook to 'positive'

Fitch ups RI rating outlook to 'positive'

The Jakarta Post, Jakarta

Global rating agency Fitch Ratings has raised Indonesia's
rating outlook from stable to positive, as the nation's political
risks had been reduced after the conclusion of the general and
presidential elections.

The agency did not say when it would actually upgrade the
nation's credit rating, but said in a statement that "Future
rating upgrades lie in the formulation and implementation of a
strong reform agenda."

Nevertheless, the completion of a six-month period of free and
fair elections marked a major step forward for Indonesia, as it
posed a very strong mandate for reform, it added.

Fitch last upgraded Indonesia's long-term foreign-currency
rating in 2003 by one notch to B-plus, still four levels below
investment grade.

Late last month, following the final round of the presidential
election, rating firm Standard & Poor's said it might upgrade the
country's rating on condition that the government continued
efforts to bolster economic growth.

Indonesia took a major step this year as a democratic nation
by holding its first direct presidential election on Sept. 20.

The General Elections Committee (KPU) officially named Susilo
Bambang Yudhoyono victor over incumbent President Megawati
Soekarnoputri on Monday, with inauguration scheduled for Oct. 20.

Fitch said an improved economy was another reason for its
positive notes on Indonesia, citing the nation's steady economic
growth and continued fiscal consolidation.

It added that Indonesia, whose economy is expected to grow by
4.8 percent this year, might contain its debt-to-gross domestic
product (GDP) ratio at 68 percent, far below its peak of 100
percent in 2000.

Rating agencies are the latest to have expressed high hopes in
Indonesia's future economy following the election.

Earlier, Morgan Stanley expressed confidence that the peaceful
election and Susilo's emergence as the new president, would bring
about improvement in the economy, which -- in terms of growth --
was still lagging behind its neighboring nations.

In its latest assessment on Indonesia's economy, the global
investment bank was upbeat that, if Susilo fulfilled his campaign
promises, the economy would benefit greatly from a revival of
investment along with the return of investor confidence.

In order to boost investment, Indonesia needs either a pickup
in foreign investment, a return of capitals that have fled the
country or an upswing in domestic investment, the bank said in a
statement sent to The Jakarta Post.

"Given the stable political landscape, post-elections, coupled
with the likely scenario that Mr. Susilo begins to deliver on the
promises within the first 100 days of office, an increase in
investment from all three fronts could materialize," it said, and
would thus lift the prospect of growth.

The statement noted that Susilo's promises centered on three
objectives: First, boosting the economy through professional
economic management and by prioritizing poverty and unemployment
reduction; second, enhancing domestic security and reducing
Indonesia's geopolitical risk; and third, raising the fight
against corruption.