Lost of creditworthiness could spell disaster: Economist
Lost of creditworthiness could spell disaster: Economist
JAKARTA (JP): Sound economic policies are now more crucial
than ever for managing and benefiting from the rapid movement of
global capital, economist Mari E. Pangestu said yesterday.
"Creditworthiness is very important in respect to private
capital flows, which constantly fluctuate," Mari told a seminar
on economic globalization and the likely challenges countries
will face.
Mari was one of three commentators on Ali Wardhana's
presentation at the seminar which discussed the importance of
maintaining a sound macro-economic policy for economic stability.
Mari noted that the loss of creditworthiness could be a
disaster for indebted countries like Indonesia because this might
not just stop capital inflow, but also could set off capital
outflow.
She said Mexico's financial crisis earlier this year, which
was sparked by the devaluation of the Mexican peso against the
U.S. greenback, underlines the importance of creditworthiness to
an indebted country.
To maintain international trust in Indonesia's economic
management, the country should always get its policies right,
Mari said.
Indonesia also be prepared for the increasing globalization
of the services market, the head of the economics department of
the Center for Strategic and International Studies (CSIS), said.
Mari cited much keener market competition and new
international norms of doing business transactions as some of the
major challenges Indonesia is facing as a result of economic
globalization.
Closer attention
In support of Mari's suggestion, Dorodjatun Kuntjoro-Jakti,
the dean of the Jakarta School of Economics of the University of
Indonesia, charted out the global trends in economic development
to which the government needs to pay closer attention.
The global trends include the increasing role of the private
sector in the global economy and the increasing public pressure
to privatize state enterprises.
Trends also indicate the need to standardize certain laws
among countries to facilitate smoother flows of goods and
services and the need to implement the provisions of multilateral
agreements such as those of the World Trade Organization to
ensure more orderly international trade in goods and services.
Thai economist Narongchai Akrasanee noted during the
discussion that the advancement in the world economy has been
supported by technological enhancement, especially in the
transportation, telecommunication and computation sectors, as
well as economic liberalization.
Although the economy worldwide tends to be globalized, the
politics of countries tends to be nationalistic and inward-
looking, Narongchai, Chairman of General Finance & Securities
Public Company Ltd., added.
And although economic globalization encourages greater
mobility of people and the integration of economic activities
across countries, Narongchai said, "politics defines borders,
nationality and limits the movement of the people."
Therefore, he said, regional economic groupings such as ASEAN
and APEC should be enhanced to serve as a way of minimizing
political resistance to economic globalization. (rid)