Saturday, August 13, 2011

The EFFECT of GLOBAL CRISIS to... INDONESIA



What happened recently in the USA and the rest of the World, not to be too worry here in Indonesia, 
since economic foundation in a good condition

Dow Jones Index fall down in the 1st day after S&P down grade USA debt from AAA to AA+  on  August 2, 2011 the date line of signing the agreement  between Congress and Government.

What would be the effect of USA debt crisis to Indonesia ? As we knew that we had an experience  as   happened in 2008 Global crisis,  our economic not effected too hard, just relatively  selective. The reason are that the portion of Indonesia export to Global economy  relatively very small compare to other countries such as  Hongkong, South Korea and India. 
                                
Hong Kong

That is why what happened recently in the USA and the rest of the World, not to be too worry here in Indonesia, but Government keep thinking creative to develop regulation and instruments to anticipate and prevent the effect to local economy.
Beside, Government applied  strict  regulation for Financial institution, Bank and Non Bank in developing the kinds of derivative products. Ratio between Foreign Investment and Joint venture with  GDP (Gross Domestic Product), also relatively low.
                                           
                                         Central Bank

From economic fundamental
  point of view, Indonesian economy in a good condition so far and able to prevent facing global crisis :
  1. 1. Economic growth, relatively high, average 6% since 2008 crisis, supported by inflation rate tend to come down to the target of 5% at the end of 2011 plus 1
  1. 2. Capital inflow keep coming to buy stocks and Government bonds , make our Foreign reserve more solid, reach the level of  US$ 120 billion 
  3.Government and Central Bank, Bank Indonesia had a special    regulation  called CMP, Crisis Management Protocol, to respond  instantly,  if any sudden reversal, sudden Capital outflow.
  1. 4. Government budget tend to small deficit with secure DER, Debt equity ratio under 30%, secure International  ratio. As a comparison, USA ratio almost 100% and Japan even more 200%
Some factors that Government should  take to consideration are to keep The Foreign funds stay longer through development the new  interesting instruments. And also pay a serious attention to the composition of  Government bond of SBN, Surat Berharga Negara, reach 35% recently.
But, how solid our economic foundation was, never immune from facing  Global crisis, since the crisis instruments anticipation we had so far relatively selected. 

That is why Government and Central bank should  seated together to formulate the new instruments in anticipation to Global crisis. This time, economic leaders facing a more challenging environment  to anticipate and prevent local crisis from global economic crisis effect.
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