Valuable economic data

Valuable economic data

The Central Bureau of Statistics, known by its local acronym
BPS (Biro Pusat Statistik), had previously compiled and published
official data on only past social and economic developments. But
the bureau has, for the first time, issued a report containing
future projections entitled Indonesian economic situation in 1996
and economic projection for 1997. The report, launched at a
seminar on Monday which featured several noted economists and
businessmen as its panelists, was surprisingly straightforward in
its observations and projections. It does not sugarcoat its
observations.

The bureau, for example, predicts a slowdown in the growth of
foreign direct investment this year and in 1997, which sharply
contrasts the ever-bullish reports from the Investment
Coordinating Board. The report cited inconsistency in micro-
economic policies as one of the main factors causing growth to
slow. It mentioned persistently-high domestic credit interest
rates as a secondary factor.

The report projects an inflation rate of 8.54 percent this
year, compared to 8.60 percent last year. And the report predicts
that inflation will rise to 8.92 percent in 1997. The inflation
projections for 1996 and 1997 are much higher than the 5 percent
annual inflation target set by the government. The report also
contains projections on foreign trade based on the estimated
economic performances of Indonesia's major trading partners and
other key economic indicators.

The BPS report should be welcomed as another valuable source
of Indonesian macroeconomic data. As the country's economy
becomes increasingly linked with the world economy and as
financial and capital markets increase in depth and breadth,
there is an increasing need for timely, reliable economic data
for policy makers, analysts and businesspeople to keep abreast of
macroeconomic conditions.

There are of course many similar reports, prepared by
government institutions, private-sector think tanks and analysts.
But the wider the variety of economic reports and analyses, the
better it will be for businesspeople and investors to make
reasonable business decisions. Risks are inherent in any type of
business, but reliable, timely data facilitates better risk
assessment-- the main factor differentiating business from
gambling.

The availability of timely, reliable reports also help reduce
market rumors. Indonesia has often borne the brunt of rumors. In
a country like Indonesia which pursues an open capital account,
rumors can exact a heavy toll. In early 1995, for example, the
central bank was forced to draw on more than US$500 million of
its foreign reserves to defend the rupiah against currency
speculation.

Rumors are unavoidable, especially in the run-up to next
year's parliamentary election and the 1998 presidential election.
But credible, timely information can shorten the life of rumors
and contain their impact.

It is therefore encouraging to note that the BPS is fully
aware of its basic prerequisite to make its information and
reports credible. The straightforward manner in which the BPS, as
an official body, made its conclusions on its qualitative
analysis will surely help to enhance the credibility of its
macroeconomic report.