Indonesia could become Asian financial center
Indonesia could become Asian financial center
JAKARTA (JP): Indonesia, with its free foreign exchange regime and the rapid growth of its economy, has the potential to become one of leading financial centers in Asia, an executive said yesterday.
Putu Antara, an executive at Bank Rama, said Indonesia, as an emerging market, has enough international recognition and attracts a great deal of foreign fund managers.
He noted that international recognition served as a very important determinant for the development of any financial market.
"If Jakarta is to progress as a financial center, we have to keep fund managers' trust in our market, and most importantly our dealers have to be more professional," Putu said.
Putu, also chairman of the organizing committee for the 1995 Asia Pacific Forex Assembly, added that the quality of foreign exchange dealers was one of the main considerations in determining the recognition of a financial center.
Vice President Try Sutrisno is scheduled to open the assembly this morning. Putu said some 450 bank executives and foreign exchange dealers from 34 countries in the region had arrived here to attend the assembly, hosted by the Forex Club Indonesia.
Speakers at the assembly will include Governor of Bank Indonesia J. Soedradjad Djiwandono, Chairman of Bank of Tokyo Ltd. Toyoo Gyohten and Lee Tsao Yuan, deputy director of the Institute of Policy Studies in Singapore.
President of Forex Club Indonesia Jeffri Turangan forecasted earlier that Indonesia, with all its potentials, would likely to grow as a leading international financial center, overtaking Hong Kong and even Singapore.
Currently the daily volume of foreign exchange trading in the Indonesian financial market is still very low, only some US$2 billion to $2.5 billion, as compared to $80 billion in Singapore.
The general manager of the treasury division of Bank Dagang Nasional Indonesia, Njoman Djawi, said that although Indonesia's financial market is still young, it has grown to become the most attractive market in the region due to its free foreign exchange regime.
However, with such a regime, Indonesia is continually open to financial crisis and speculation by foreign dealers unless macro- economic aggregates are managed adequately.
"As long as the government's macroeconomic policy is very good, nobody will like to speculate on our currency," Njoman said. "Once the U.S. dollar reached higher than the central bank's ceiling rate, but soon it went down again because there was no fundamental reasons to speculate."
The government, however, has expressed concern over the level of foreign participation in its debt market. It said the influx of foreign capital would put heavy pressure on the country's money supply. (rid)