Fri, 23 Jul 2010

Indonesia, with its strong economic fundamentals, has successfully passed through the global financial crisis, a global banking official says.

During a brief visit on Thursday to the trading floor of the Indonesia Stock Exchange (IDX), the chairman of the Bank of New York Mellon Asia Pacific branch, Christopher R. Sturdy, said that while
inflation may pick up in coming months, the Indonesian economy would remain stable until the end of the year.

“I think the economic fundamentals are very strong in Indonesia, and many other countries wish they had the [inflation] problems [Indonesia] has had, because you have sailed through this crisis without any downturns.

“[There is] so much to admire about Indonesia,” Chris said.

Bank Indonesia has officially increased its economic growth forecast to 5.6 percent from 5.2 percent, on improvement in the country’s fundamental indicators including exports, investment and consumer spending. For similar reasons, many analysts have projected the economy to expand closer to 6 percent this year.

In 2009, the economy grew by 4.5 percent, less than the 6.1 percent recorded in 2008. The decline was partly attributed to a drop in exports and investment following the 2008 financial crisis.

Bank Danamon economics and markets chief Anton Gunawan told The Jakarta Post there were many reasons why foreign investors “over-rate” Indonesia’s investment portfolio.

“Our returns in government and corporate bonds and stocks attract foreign investors. Our financial assets are relatively good too. And, not forgetting that Indonesia’s investment rate tends to increase,” Gunawan said, adding that the country’s fiscal credit was relatively safe and therefore there was little likelihood of capital controls being imposed.

Compared to its neighbors Thailand, the Phillipines, Vietnam and Malaysia, currently facing political instability, Indonesia was “relatively clear”, he said.

As one of the four major commercial banks providing American Depository Receipts (ADR), BNY Mellon serves several Indonesian companies, including PT Telekomunikasi Indonesia Tbk (TLKM), PT Indosat Tbk (ISAT) and PT Bumi Resources Tbk (BUMI). (est)