Tue, 23 Feb 2010

Jakarta (ANTARA News) - An Australian observer of Indonesian economic affairs, Hal Hill, said foreign investors were confused by the fact that the Bank Century case had become an issue being handled by Indonesia`s House of Representatives (DPR).

"I think the government`s decision on the Bank Century problem was correct. Therefore, foreign investors are quite confused. The economy was still sound, the crisis has been overcome, the President chose reliable technocrats in his cabinet but why is the Bank Century case being processed in the DPR?" the researcher from the Australian National University said here on Monday.

He said the government`s decision to save Bank Century was right because it had prevented the country from experiencing a crisis in the banking sector.

"The government`s decision was correct. The important thing is that it prevented banks from collapsing. Although Bank Century was small, the entire banking sector could have collapsed if it had not been bailed out," he said.

Hill said he saw two factors behind Indonesia`s success in dealing with the world financial crisis. The first factor was that Indonesia had not been too dependent on or linked with the world economy, especially in the financial sector.

Another thing was that the contribution of export-import trade to the country`s gross domestic product was still low compared to that of its neighbors such as Malaysia and Singapore.

He said China`s economy meanwhile had remained still strong and acted as a locomotive to draw the economic wagons particularly in Asia.

Hill said the second factor was the government`s capability to adopt policies which mitigated the impacts of the global financial crisis.(*)