Various factors may affect economic development
JAKARTA (JP): The recent banking scandal, leveling-off of non- oil exports, declines in foreign investment, slow depreciation of the rupiah, low oil prices and the increase in U.S. interest rates are likely to affect Indonesia's economic development, an analyst says.
"Indonesia, therefore, should take strategic measures to overcome these problems," Rizal Ramli, the managing director of Econit, said yesterday during a discussion on developments in the macroeconomic climate.
Econit is an independent advisory group on economics, industry and trade.
He said many foreign parties have become jittery over the performance of Indonesia's economy and its ability to achieve the government's development targets.
"Although some of the factors causing this apprehension cannot be explained economically, such as those related to the country's political situation, most of them are a result of economic forces," he said.
The case of Bank Pembangunan Indonesia (Bapindo) -- which involves a bad loan of US$620 and accusations of official corruption -- has hurt the image of the country's banking system in the eyes of the international world.
"There is no need to argue about the poor rating that an international rating company has given to our banks. What is needed now is a concrete plan of action to correct our mistakes," he said of the recent Standard & Poors assessment that Indonesia's banking industry is in financial stress.
Disclosure
Director of Econit Laksamana Sukardi said more banking disclosure is needed to prevent such cases from happening again.
He explained that disclosure does not necessarily mean a violation of banking secrecy, which has been designed for the benefit of the public and the bank's clients, "not as a shield for certain people to hide behind," he said.
According to Laksamana, the point in making a banking disclosure was to balance it with the bank's secrecy. He believes the current situation is imbalanced, with more secrecy than disclosure.
He said disclosure could reveal the concentration of a bank's portfolio and its fields of business, its creditors who were at or approaching the legal lending limit, the percentage of creditors from small, medium and large-scale businesses and big acquisitions made by the bank's clients.
He also suggested that a higher minimum capital be stipulated for the establishment of a bank. The current stipulation is Rp 50 billion ($23.36 million), as compared to $400 million in Taiwan.
Rizal said that in the other sectors, the government has yet to establish clear plans to meet the new global trade era following the conclusion of the Final Act of the General Agreement on Tariffs and Trade.
"An increase of about 15.4 percent or $116 billion in world trade will go to Asian countries outside Japan as a consequence of the GATT. Without pro-active steps to increase non-oil exports, we will never gain the benefit of the new trade agreement," he said.
Rizal also suggested that deregulation is needed to reduce high business costs. (10)