XINHUA/Upgrade of Indonesia's credit rating to help lure investment
By Mulyanda Djohan
JAKARTA, June 22 (Xinhua) -- The rise of Indonesia's credit rating by Moody investor rating from stable to positive on Monday has smoothed the government efforts to attract more investment.
Indonesian Central Bank Deputy Governor Hartadi Sarwono has said that the increasing grade rating provides more positive outlook to the country's economy.
"The improving outlook shows that Indonesia has a well- preserved macro economic fundamentals and reducing debt ratio. This is a good momentum that needs to be maintained to achieve the investment grade rating," Hartadi said in his statement distributed to the media in to response the sovereign debt rating With relatively stable political condition and strong economic fundamentals, the Southeast Asia's largest economy has resumed receiving more capital inflows recently.
The global economic recovery has restored global investors appetites on risk assets in emerging markets, including Indonesia, which is expected to give higher return.
The European debt crisis has been seen not to give significant impacts on the country's economy, as Indonesia's exports to Europe only account for 11.4 percent of the total export. The success of Spain selling its debts has also eased concern on the crisis.
Much have been done by the Indonesian government to improve investment climate in the abundant-natural resources country with over 230 million population, including creating stability, improving governance and regulation.
President Susilo Bambang Yudhoyono who was re-elected on July 8 for his second terms has boosted investors confidence as he has pledged to continue and strengthen reforms.
The government plans to give incentives and tax holidays to investors after it allowed them to invest in agriculture sectors and widened their ownership on certain sectors such as healthcare. President Yudhoyono on June 18 said that the government is open to negotiation for higher incentives.
The Indonesian government needs over 1,400 trillion rupiah ( some 153.256 billion U.S. dollars) funds to finance massive infrastructure projects by up to 2014, but the country could only provide over 400 trillion rupiah (about 43.767 billion U.S. dollars) and would seek the rest from investors.
The facilities are expected to help Indonesia to achieve at least 7 percent growth in 2014, and an average of 6.6 percent annually by the year to reduce unemployment, which climbed during the global financial routs in 2008 and 2009.
For this year the government targets to reach 6 percent growth with deficit of 2.1 percent. Indonesia's economy has been resilient from the global financial routs in 2008 and 2009, the country registered over 4 percent growth at the first and the second quarter of 2009, the highest in the world after China and India, when other countries suffered from strong contraction.
The infrastructure also aims at improving the country's economic efficiency amid the implementation of some free trades.
Indonesia has been optimistic to reduce its debt ratio to the GDP to 27 percent at the end of this year.