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.