Global Recession
Jan 23rd, 2008, in Business & Economy, by PatungThe effects of a global recession on Indonesia.
Some responses to the likelihood of an American, and global, recession, and its impacts on Indonesia.
Price Stability – Rice
Economy minister Boediono said the government is most concerned about ensuring that prices and supplies of vital goods are stable, above all rice, production of which is hoped to be increased by 2 million tons annually. antara
Growth
Boediono said economic growth prospects remained positive, because internal factors were the most influential, – interest rates were stable, infrastructure projects such as road building and new electricity generation were still going ahead, as was housing construction, and additionally, prices of export commodities remained high.
Consumer spending power would remain strong, provided price stabilisation efforts worked, he said. antara
Dumping
Trade minister Mari E. Pangestu worried that Chinese manufacturers, faced with declining American and world demand for their products, would resort to dumping goods on the Indonesian market, and smuggling. Indonesia had to step up anti-smuggling efforts, and may have to use anti-dumping measures.
On prospects for Indonesian export sales to America she said in 2007 a decline had already occurred, and that Indonesia in any case was more focused on the Asian market. antara
Capital Markets
Bank Indonesia governor Burhanuddin Abdullah said there was an increased possibility of capital outflow from Indonesia, with dollars being in higher than usual demand. On 21st January foreign investors took 1.1 trillion rupiah out of the country.
His deputy, Budi Mulya, however said BI was on the job: tempo
There’s no need to worry about the money markets in Indonesia, because BI is always active in them.
Stockmarket
On 22nd January the Jakarta stock exchange (Bursa Efek Indonesia, BEI) suffered its biggest drop since the 2002 Bali bombings, falling by 7.7% or 191 points. antara
BEI director Erry Firmansyah however said there was no need to suspend trading, because market mechanisms had to be allowed to operate. antara
22 Comments on “Global Recession”
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Arema says:
Boediono said economic growth prospects remained positive
I hope he’s referring to real growth. It is true that Indonesia’s economy is expected to grow at a good pace, probably another 6% or so, but with the inflation just as high, the real growth is actually zero.
On 22nd January the Jakarta stock exchange (Bursa Efek Indonesia, BEI) suffered its biggest drop since the 2002 Bali bombings, falling by 7.7% or 191 points.
Black Monday and Terrible Tuesday for Asia. But The Fed cut the interest rate by 75 pts last night, stimulating a rebound this morning throughout Asia. Strangely enough though, US stock market did not respond as positively, still going down although not that much.
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Sputjam says:
Funny how US is doing the exact opposite to what was enforced by asian nations in 1998.
Asian nations were forced to put up ridicolous interst rates, foreclose on businesses who could not sustain and mop up excess money in the market and prop up their local currency. Result was catastrophe with many losing their businesses and lives.
Lowering US interest rates will devalue the dollar lower. I heard that banks in america are cutting their losses, by dealing directly with homeowners that are suffering by lowering their rates even further.
I wonder what the result would have been like if Indonesia had followed similar principles in 1998. -
Dragonwall says:
Brack
China ‘dumping’ goods into the Indonesian market also brings the prospect of inferior and/or defective products. Smuggling out of Indonesia for a substantial markup would also contribute to the recession.
Are you sure you know what you are talking? Indonesia buys a lot from China does not mean they dump. If you goes to any container ports in Indonesia there were many that was levied with high rates by the C&E that they were all mostly left to rot at the yard.
And it would be more ridiculous to say they smuggle it out for substantial mark ups! to which counntry? US, Australia, Singapore or where.Indonesia did tried to lower the interest to boost the economy and US is also doing the same. Are they doing the right thing?
By lowering interest rates is really not something to de done in a macro economy. Many will assume that by lowering the rate, people pay lower rates for their loan. But forgetting that the their will be a capital flights because of low saving rates. The money will then run foreign or to other investment tracks and portfolio.
Once the BI was lowering the rate to attract investment but I said it spelt death for them because they will be eyeing for the rupiahs to be push to 7500 = 1 USD. And BI met a certain death when the rupiahs began to slide even further close to 10000 to 1 USD now despite the weakening dollar.
People were so naive into thinking that when you sell something cheap people will buy. Same thing as what the US is doing now. The dollar will continue to weaken and the economy will continue to flop.
A country must raise the interest rate on savings for people to throw away foreign currencies and opt for the one with the highest interest rates. This will attract foreigners into coming in to invest as well as local putting their money into savings. This will not only strengthen the own currency but place the economy into a more liquid position. As for the banks it is up to them to displace their money and better still the margin between saving and loan interest be place as close as possible. When the investor and depositor find that their earnings from deposit substantiate them to buy something from the loan they could get that from the bank.
Let say I put throw away 1 billion dlrs for rupiahs I will get somewhere around what 10 trillion rupiahs? With interest at 15% highest in the world I will get 1.5 trillion/annum. When I need a loan without touching my savings from the banks say 18 percent, I am actually getting a loan for 3 percent. But putting the money into business that generates 12 percent to 20 profit gross, I still make between 9 to 17 percent.
So during hard time the banks earns 3 % the economy obtain the cc for their business then the wheels will turn.
I suppose these people from the bi were a bunch of qualified half past sixers.
The reason to raise the interest rates is to attract the investors into buying the rupiahs. The us do not need to because they are already in usd whereas in indonesia they are in rupiahs.
The more rupiah they throw the weaker it gets. The more people buys usd the higher it gets.There is no three ways to that.
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There is no logic in this statement :-
Let say I put throw away 1 billion dlrs for rupiahs I will get somewhere around what 10 trillion rupiahs? With interest at 15% highest in the world I will get 1.5 trillion/annum. When I need a loan without touching my savings from the banks say 18 percent, I am actually getting a loan for 3 percent. But putting the money into business that generates 12 percent to 20 profit gross, I still make between 9 to 17 percent.
I may as well just dump the money in the bank and become a beach bum in Bali and Lombok earning interest @ 15% return, instead of depositing and later borrowing for businesses and getting, in your own words, 9-17%, which averages lower than 15%.
Interest rates and value of currency is a precarious balancing act. Too high an interest rates will stifle the economy as local businesses and community will not borrow. Too low and it may affect currency value.
It is the job of BNI (Bank Negara Indonesia) to do this balancing act.
In my opinion, the difference between a large economy and a small one is that, large economy seldom crash. Reason, their size deters speculators from cornering the economy, like they did to asia in 1997. Just watch the US. The ones shivering in their pants presently are the holders of US dollar reserve, which means ASIA and MIDDLE EAST.
Whe asian economy crashes. it is always about corrupt practices, whereas if it happens in the US, it would be due to misguided funamentals, never about corrupt practices of highly paid US bankers, who would sell junk products for huge profits and bonuses.That is why I fully support one currency for the whole of ASEAN. By having one currency and an open market within ASEAN, we will be considered as one larger economy than ten smaller fragmented ones.
I think it is about time asians stop thinking so lowly of themselves. The west are just as corrupt, only the method of operations may defer.
When it comes to forex trading, 2/3 of trading value are due to speculative reasons, and one 1/3 are for real trade.(i.e. buying and selling of real products such as machinery and commodities).So when we talk about common currency within ASEAN, it could be in a form of currency board, whereby one ASEAN currency are fixed to trade with another at a fixed rate. If ASEAN currency are fixed, then member countries will hold each others currency as reserve, not the US dollar, and ASEAN Monetarybank will decide on interest rates and value of currency to that of other major economies, independent of other denominated currencies. Fixed currency and common market will boost trade within asean, and manufacturers will be more inclined to set up production in a common market, as their cost will be less affected by currency movements. Less economically able countries such as Cambodia, Myanmar and laos will benefit as their cost of labour and land is low, whilst their rivers could produce cheap hydo electric power.
Indonesia have been suffering from high interest rate regime for as long as I can remember. The reason is simple. Rich Indonesian do not keep their money in their own country, even with high rates offered. This in turn affect their own population, who have to suffer greatly on their house mortgages and car finances, turning the population into debt slaves. For the others, they can’t be bothered to borrow, therefore stiffling growth to businesses such as construction and housing developers. hence also the reason why only Jakarta is huge as compared to other cities. Indonesian bank are financing only to people who live in jakata and neglecting other regions.
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It is the job of BNI (Bank Negara Indonesia) to do this balancing act.
Can you tell me in your experience how many times BI failed in the acrobat? I had a posting that that was deleted by someone, i don’t know who, that said Thailand did that once and they succeeded by squeezing the economy after that.
You and your one currency from way back when trying to do the likes of Euros when things doesn’t work for Asia or Asean countries, ok. How do you tackle the problem? Noughts.
Even to give you a try on the one currency policy you will not be able to come up with the funds needed to cover share and share alike. Indonesia is in the deficit? How many billions USD is that 60 to 90 billion? Most likely around 100 billion.
Do you know how many beach bums are there in this world doing nothing? Plenty but you are not one of them definitely.
I fully understand that in the normal foundations of a solid strong growth country, the banking systems will have to do the balancing act with interest rates slightly over the savings rate. Everyone knows a mother is always a woman (I mean giving birth not single parent).
In this case of Indonesia with it’s ailing economy, faltering rupiahs, limited foreign investments, slow export, high inflations, rising costs of fuel and everything that is becoming more and more costly to maintain, can you tell me an option that you can take to counter all these problems. YOU AND THE BI GUYS ARE UNABLE!!!!!!!!
1. if you increase the savings rates it attracts money local and foreign.
because everyone had a bargain. not having to work and earn
interest. tell me will you sit there, yeah perhaps you would. in
common language people will pump the money, capitalize on the
situation, to indonesia. the banks is liquid and has a lot of money to
lend, diversify and churn the money in re-investment etc etc and this
will earn them an income to supplement the interest rates.2. let say the bank increase the lending rates to 19 percent. business men
will be jumping of the high rate. but there are many developing
project that needs fund.
to consumer, if you can’t afford don’t buy.
developers will borrow money to make development at the same rate
because they profit from the projects not from the interest.
here comes a housing buyer who have a savings and or a factory who
has the working capital place into savings earning 15 %. both make a
loan at 19 %. there is a difference of 4% on top of their income.
when we refer to savings then it is excess funds and these excess
funds we are looking from foreigner and a small percentage local.so on zero zero basis their interest is only 4 %.
3. the factory has an export or sales mark up of 20 to 25% and in usual
circumstance it is higher. less the loan he still gets between 1-6% in
the norm but in this case of hedging he gets an extra 15 on top of that.for the housing buyer in usual case he gets saving interest of 4%
whereas his loan is already 12% which means he has to find another 8
to subsidize the difference. this is one reason in the us that many are
facing foreclosure because they are unable to pay for their loan.
same thing will happen to indonesia or any other countries and that
is why because of these there is a global recession since everyone is
facing the same predicament.4. in this case we offer a high saving high interest. he gets 15% income
and pays 19% in loan, so the difference is 4%. he may go into default if
his income is too low to cover the 4%, but in usual case it is
premeditated and precalculated when they started buying house.for any other business they also apply the same principle. this way the banks activities increase rapidly, the market gets moving and business starts rolling.
let say for myself.
i have 500,000 usd to pump into indonesia when the interest gets 15% in return. the bank offers a 20% interest rate on loan.
i will parked my money in the bank and start doing things. a business and buys a house and a car. all from the loan. i am only paying 5% of my loan.
can you make 5% on you business in a month? can’t the bank earns 3-5% a month. after paying that i still have my 500,000 sitiing in the bank. you still have a doubt where is the bank going to displace the money parked into their bank. this i understand they know where to dispose.let says. now bi is placing it at 10% savings against 13.5% the same principle applies. like i said before. you don’t offer 1 dollar when you are making 100. in high volume of currency movements 2-3% of profit is substantial for a solid bank. it is like gold, who makes 25%?
to you, you are more academic in calculation whereas the market is where the real battle is going on.
indonesia have been suffering from high interest rate regime for as long as i can remember. the reason is simple. rich indonesian do not keep their money in their own country, even with high rates offered.
this show that you know absolutely nothing about investments for sure.
my former boss, had mistakenly parked his money into malaysia and got stuck for 2 years, and yet we are able to get the money out of there and have it invested in indonesia during and after the riot between 97 and 99,
so by you saying those rich chinese that have parked their money outside indonesia for as long as you know shows that you know nothing about banking. it is the other way round.
and as for ‘as long as you no the the high interest regime”, that was the period of prosperity where indonesia had enjoyed without you knowing it.
one more thing during those periods, the indonesians are not suffering, whereas now they really are. feel it!
tanri abeng was working with multi bintang, but how does things fare for him when he later accepted the post of a minister. other beer companies are doing better than them. one for sure eddy tansil’s becks beer and the others, tiger etc.
they adopt the same policy? to high an interest don’t borrow.
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Your logic of being able to borrow at 5% difference between fixed deposit and bank lending rates is applicable only if you have vast amount of money to begin with. In a way, this method eliminate risk to banks. But it still make no sense in geting smaller returns by borrowing against your deposit and earning less or about equal by doing nothing.
High interest rates may encourage savings, at the expense of growth. Consumer appetite will dwindle, as borrowing money to spend is overidden by their desire to save. High interest rates also means that indonesian rupiah is in high demand, and that their economy is overheating.
Unfortunately this is not the case.
The rupiah is stored in overseas rupiah account earning similar interest rates.(Malaysia is not one of the countries that offered fixed deposit for rupiahs.) The BI have no control as their currency is being speculated by forex traders who borrow these overseas rupiah deposits to indulge in speculative manouvres.
A speculator will borrow in yen (0.5 interest) and buy rupiah (15%). BI is in no position to protect its currency.
2/3 of forex trade is for this purpose. manipulating currency weaknesses, not doing real trade. Volatile currency is bad for “real businesses”, but good for forex traders and currency speculators.
Your suggestions above will only benefit those who are already rich and liquid in indonesia, but have no solution for the majority. Looks like BI only protects the interest of the wealthy. Maybe the majority does not deserve govenrment assistance. After all, like the fuel subsidies, only the wealthy are the ones who benefit from low fuel prices.
The idea of a single ASEAN currency entity is to remove this speculative frenzy, provide stability and above all, low interest rates and inflation.
It may not be possible to initiate all ten countries together. Singapore and Brunei already have this in existance for decades. (Currency board, like the one I suggested).
Malaysia and Thailand have been consistently level at Ringgit1=Baht10 or 11 for decades. They could form another currency board. If Malaysia and thailand were to sign a free trade agreement(FTA), it would magnify free flow of trade between the two countries by many times. After all, they are the second and third biggest economy in ASEAN, Indonesia being the biggest.
If I am BI chairman, I would just join the currency board between brunei and singapore. That would remove the rupiah uncertainty and volatility, reduce interest rates which will then promote organic consumer growth (not the top heavy “rich” consumer growth currently enjoyed in jakarta) and put many currency speculators out of job. The rupiah need not be replace. Only the rate is fixed to the present singapore-brunei rates.
Why must singapore be included? because they probably hold a vast quantity of indonesia’s liquid assets. -
dewaratugedeanom says:
@Sputjam
So what you are proposing is to convert ASEAN into a counterpart of the European Union, a common market with a common currency. This however also requires political convergence, difficult to achieve with political oddities like Myanmar and North-Korea and a mix of capitalist and communist regimes. And how will the Asian superpowers, Japan, India and China react?
But the prospect itself is tempting. -
Correction above: … difficult to achieve with political oddities like Myanmar an North-Korea in the ASEAN Regional Forum and a mix…
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LIKE I SAID BEFORE, YOU DON’T JUST OFFER SOME NICE PICTURE AND HOPING FOR THEM TO COME IN. YOU HAVE TO MAKE THEM COME CRAVING FOR MORE
I am not sure we are talking on the same frequency and that’s for sure.
Can you give a good reason why must all those other progressing country want to take in Indonesia? On equal footing? I told you there is a real battle going on and this battle is the for the fittest who will survive.
NOW A COUNTRY’S ECONOMY CAN ONLY OVERHEAT WHEN The growth is very strong and with plenty of money in the bank and not knowing where to go.
So as for Indonesia, can you tell me what you have? Growth? Money? Strong economy? High employment rates? What have you got!!!!!!!!!!!!!!!. What that was pictured are for show only. Go asked Gultom or Burhannuddin if they knows. They are just seat warmers. I mean no disrespect. When she assumes the office I thought she paint a nice picture but in actual battle ground, she is about the same ole thing like Radius Prawiro.
If you cannot apprehend the macro economy then there is no micro economy.
It is like a patient and a doctor. This patient has a growth and suffers a heart attack.
What will the doctor do? Revivie him and then attend to the growth. And if there is bleeding somewhere now what? He will definitely let him bleed.If you do not put the keys into the engine, not only the car won’t move, the engine won’t even start.
I can fill up the whole damn IM page on this topic but I doubt I am prepared to spent the time.
So you agree that what I am saying is applicable? Forget who is rich or who is poor.
WE ARE ARE FERRING TO ATTRACTING MONEY INTO INDONESIA, RIGHT? WE ARE REFERRING TO STRENGTHENING OF THE RUPIAHS RIGHT?
WE ARE REFERRING TO BRINGING ALL THOSE CAPITAL FLIGHTS BACK INTO THE ECONOMY RIGHT?THEN WE ARE REFERRING TO JOLT THE INDONESIAN ECONOMY BY GIVING IT A SHOCK TREATMENT RIGHT.
You can continue talking about this topic and ten years from now you are still NATO.
You are assessing the situation and making analysis on the academic side as a layman or whoever you are. Whereas I am talking about the apprehension of the immediate situation on the actuarial side. We are speaking on a different level.
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dewa asked –
So what you are proposing is to convert ASEAN into a counterpart of the European Union, a common market with a common currency.
I think the ASEAN common market plan was destroyed/delayed in the aftermath of 1997/1998 asian financial crisis. A common market will intoduce some form of protective barier from imports, which may assist in manufacturers to set up plants to produce their goods within the common market, due to economy of scale (population of 500 million, with 1/4 from indonesia alone). All tariffs for products made in members states should be eliminated, if it contains more than 50% or more local content.
It would be nice if, and indonesian registered company, is able to do business in Thailand as any local Thai counterpart and vice-versa. Profits from Thai operations will of course end up with Thai tax collectors.
There is no need for a common currency, if all large ASEAN countries, in terms of economy decides to hedge their currency a a fixed rate. So if one currency falls with rgards to the UD$, all the others will fall in tandem. What this means is that there will be more financial discipline within each member country to manage their financial matters wisely. This will eliminate steep declines and rises in currency movement with regards to other international currency such as the euro, yen and USD.Dragonwall quoted the following –
WE ARE ARE FERRING TO ATTRACTING MONEY INTO INDONESIA, RIGHT? WE ARE REFERRING TO STRENGTHENING OF THE RUPIAHS RIGHT?
WE ARE REFERRING TO BRINGING ALL THOSE CAPITAL FLIGHTS BACK INTO THE ECONOMY RIGHT?there is very little chance of bringing in all the capital flights when you get similar amount of returns for your rupiah deposits if you put the money in a singapore rupiah account.
And the speculators will use this rupiah deposits to play around the rupiah, making it volatile and unstable.
Increasing interest rate will provoke similar rises in the singapore rupiah account, so the money does not reutrn.
Malaysia fixed this problem in 1998 by introducing currency controls, which made the value of the ringit worthless overseas, forcing all the capital flight to return, and due to this, Malaysia did not require IMF loan. -
I will jot a few lines for you.
1. Malaysia ringgit are worthless overseas? forcing capital flights to return? The exodus was minimal from the start. If you say Indonesian Rupiahs is worthless overseas I agree but not Malaysian ringgit.I didn’t know there is a Singapore rupiah account? Except BI, do you want to walk in to any banks in Singapore and asked if they have a so called Singapore Rupiahs account?
Any other currencies yes.As to the volatility, you do not need Singapore, there are plenty in Indonesia. Why would they speculate on a second market when they have it first hand in Indonesia.
If you have corrupted 1 billion dollars would you be bringing the money back into the country in your own name? The answer is abvious, right! So what makes you so sure that the capital flight does not return.
Besides, those capital flights are pocket change compare to money and portfolio managers.
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Don’t listen to those Ministers. They are only good at painting pretty pictures. The problems that we have is far worse than what they had mentioned.
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Malaysian ringgit was taken off international trade, after the deputy PM, anwar Ibrahim was sacked due to incompetency in protecting the economy, and the central bank governor took over and imposed currency control, making the ringgit worthless overseas. That central banker is now the deputy finance minister(non-political deputy finance minister which is quite unusual).
During the financial crisis, singapore banks were attracting ringggit deposits higher than that offered in malaysia (Thailand and Indonesia suffered similar fate), causing capital flights. IMF suggestions of increasing interest rates deposits in local banks were formulated, but singapore banks rates were offering much higher rates.These local currency deposits in singapore were used by forex traders to short the value of ringgit, rupiah and baht and their respective stock markets even further, causing the value to drop even more and the central banks to increase interest rates further upwards. It was a hopeless situation. Due to funds entering from capital flights from neighbouring countries into singapore, Sing$ rates were unaffected, but singapore was used as a base to destabilise their neighbours currencies.
Malaysia’s imposition of currency control brought stability in forext rates and allowed govenrment to lower interest rates, plus it made the vakue of ringgit overseas worhtless, forcing the ringgit deposited overseas to come home. Hnece they need not borrow any money from IMF. Thailand and Indonesia, on the other hand did not do this and were forced to borrow from IMF with stringent conditions attached.
Notice that many banks and large companies in indonesia are presently are under foreign ownership or foreigners holding large stakes. Some foreign funds bought the stakes cheaply and later sold it to other foreign parties for huge profits.
International economist were quick to blame corruption and lack of transparency for the situation.
In fact, this is untrue. The same corrupt and untransparent government had been giving high growth rates in the region for decades, and it was the united attack by foreign hedge funds that caused the economy to collapse, after bloating the local assets such as stock markets to unbelievable levels. Indonesia before 1997, had been prudent in its govenrment spending, unlike malaysia, whereby the government under mahathir was addicted to mega projects.
Take notice that when similar situation happens to the US(sub-prime mrotgage crisis), corruption is never the reason. To make ot worse, they imposed exactly opposite to what was inscribed to ASEAN in 1997. Was it a capital domination process, i.e. foreign fund destabilisng regions currency for control at a steep discount?
If Indonesia had imposed currency controls then, Suharto could have still been in power and the racial strife that followed could have been avoided.
Corruption in indonesia is prevalent due to culture and bureaucratic system. If you make some money, the people involved, including the person in the tender committee, to the clerk who process the payment, expect some gratitude payment. Somehow, I feel the system is changing, and many seems to be unreceptive to accept any gifts. Hopefully, this momentum will prevail.
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Indonesian rupiah currency volatility can only be reduce if forms a currency board to singapore ( a large trading partner and the holder of much of its wealth).
The ringgit is already pegged to the yuan( not officially and my opinion only), thus making the formation of a single currency in asia more of a reality. Currency control imposition in Malaysia ended the same day the yuan was traded internationally. -
Is Anwar that competent as reported or what? It is the dirty politics of Mahatir by having him charge for being a gay etc. The actual fact is that Anwar was getting too close to Singapore and is more liberal, and that makes him incompetent? make some back tracks dude.
Since when the yuan is publicly trades? And for MR to peg with yuan?
The problem with you is tht you are always complaining, whinning and sighing about Singapore’s progress and growth. You can only ENVY.
There are many many brokers, money managers throughout Asia and everyone is in for a kill to make money. So if they are based in Singapore then that becomes Singapore’s fault?
Singapore didn’t even offer high rates on their dollar, why should they want to attract the MR by offering high interest rates? I am unsure whether your analogy into econo science in the Asean region is as prudent as they actually are.
When the Indonesian banks are owned by foreign it is because BI and bank owners don’t have the money to continue and wants foreign participation or a quick way out of any BI intervention into their past. As the share are being traded cheaply, you only have yourself to blame and none others.
If Indonesia had currency control, then Indonesia could have been worse. Maybe make it 100 rupiah to 1 USD? or 1 Rp to 1 USD? You have the answer all right before you only the reverse.
Controlling a country’s currency isn’t all about interest rate or people jobbing your currency! It is all in the structure in controlling, export, import, taxation, spending, stability, employment rates, cost of basic commodities. If all these are properly streamlined then automatically the currency will stabilize. People can only do marginal tradings. Unexpected economic attack will usually rendered useless as it would only shake the system for a while and not too long like China, Hong Kong and Singapore.
Don’t yu get it!
if forms a currency board to singapore ( a large trading partner and the holder of much of its wealth).
You make yourself a laughing stock.ha.ha.ha. asked anyone in Indonesia, will other countries be willing to take in Indonesia? Or is Indonesia worthy of being a trading partner? In currency? You can boast of natural resources. But when talking to money managers, no one digs that.
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Hello,
The young economist is back!
Price Stability – Rice
Economy minister Boediono said the government is most concerned about ensuring that prices and supplies of vital goods are stable, above all rice, production of which is hoped to be increased by 2 million tons annually. [1]
Words from god speak to me that ppl who have been investing on agricultural sector in Indonesia will become Billionaires soon enough, as global demand for commodities rise but shortage of supply increases.
Dumping
Trade minister Mari E. Pangestu worried that Chinese manufacturers, faced with declining American and world demand for their products, would resort to dumping goods on the Indonesian market, and smuggling. Indonesia had to step up anti-smuggling efforts, and may have to use anti-dumping measures.
On prospects for Indonesian export sales to America she said in 2007 a decline had already occurred, and that Indonesia in any case was more focused on the Asian market. [3]
Good on the government, its about time we stand up to our feet.
Growth
Boediono said economic growth prospects remained positive, because internal factors were the most influential, – interest rates were stable, infrastructure projects such as road building and new electricity generation were still going ahead, as was housing construction, and additionally, prices of export commodities remained high.
Consumer spending power would remain strong, provided price stabilisation efforts worked, he said. [2]
If you keep imagining a road to prosperity, whether you are going slow or not eventually you will get there. Let this economic growth indicators be a key that we are going there, but we need to speed up, to say 8% growth :P.
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Herman Hermit says:
Your indicatations about the global recession impacts on Indonesia is good enough. But if I can suggest you,you can share with me about it. Jus for information, I would like to write a book about how can Indonesia’s people still alive in the next global recession. Like Warren Brusscee said that the global/great depression arrived in 2007 and will finish in 2020. And Indonesia, ofcourse, will affected by USA enomic healthy. Thank you.
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Indonesia in the era of post 98 riot have not in actual fact, except in statistic report, showed any positive increas in growth at all.
For them to reach 8%, my young economist, is a far fetch number.
Countries neighboring Indonesia wouldn’t even dare make any prediction or forecase in the region of 5.
If Indonesia works on the actual figures, I would say perhaps between a deficit figure and 0.5%!
Indonesia is today a net oil importer. They do not have the dollars to play with and forget about thinking Euros.
That little bit of money Indonesia has, can’t even resolve the internal problem no wonder they are going all out to increase this and that to obtain money.
If you say this is a positive steps whether slow or not I agree but reach there bankrupt.
You can profess and announce to the world what you possess in potentials. It is the implementation that matters most.
I will give you an example.
A foreign company walks into Indonesia and say I want to invest 10 billion USD in the HPH. The first thing they face in foreign workers fees. Then departmental officials coming to stake their share. Problems arises. Then workers problem. Then taxation problem. Then export and import problem with excise.
Will a person dare make that approach? Another example. Soros declared that he will invest in Palm Oil in Aceh. What happened till now?
Indonesia was thought to have progress when Soros was commissioned to make announcement on such investments. But at this stage of rotting in Indonesia do you think they care?
In book what you study you score great marks. In the field is is entirely a different facet of your belief. If you continue to rely on reports by those coffer mug goons, you won’t get very far my dear friend.
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Sorry Dylan,
I am not trying to mae some remarks to discourage you. It’s good to present your opinion. Before you make an opinion, we should be weighing the pros and cons of economic abnomalities, country conditions. current world development.
Understand one thing. Self praise is no praise.
We read reports and based on that a person began praising that their country is doing great. This is not the case.
Analyzing the whole issue. Look around you. Visualize what is going to happened. Then sum up with a more solid and concrete comment on the opinion you have gathered to derive a conclusion.
There are many things that we don’t get to see with our own eyes what happened but it does without you knowing it.
You need not believe what I say, but you could observe and get a feel of that honestly.
What was the report last year? You think that they are progressing but why are they collapsing.The oil price is going down, but in Indonesia nothing happens. No one seems to be interested in USD because of their weak economy and yet the Rupiahs keep sliding downwards. Why? Something is very wrong with the economy, right! so which part is wrong if progress is that bright?
This is what happened to Indonesian politicians. They know they have a need, go around lobbying for aids. But when aids came in what happened next. The very first thing they do is to think of a way to lay a hand on them and see who gets the most and start counting the money.
Have you hear of a stock exchange in any country that does not have people buying shares? Indonesia is one of them so that you know. There were many instance when you want to buy some share the price gets higher and then people just shy away. But when you wanted to dispose off some shares in your hand you will see no buyers.
How does the Indonesian Government allows these to happen.
In China they will not allow speculator. You buy physical shares and people will buy them back if not the company will. Same thing applies to other countries.
I will never go near the Indonesian stocks exchange.
The bottomline is that no one country trusted Indonesia anymore. And now Indonesia is making an attempt to borrow money from IMF again.
Like a commoner, if I borrow 10 rupiahs from you and promise to pay back by certain date. You didn’t, so I set an option and you agreed but did not carried out. So what will happened when I try to borrow money from you again? the answer is NO otherwise the condition will be steeper right. You will set a condition or a sanction against me and ensure I repay back the loan otherwise no deal right!
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stu1 says:
sputjam,
you ask why good economys like china and japan would want to join the same currency as failing countrys like indonesia and myanmar,
The uk joining currency with the likes of slovakia, latvia and poland doesnt excite me either and im happy the uk is out of the euro yet our government wants to leads us into it.
Last time i visited france and exchanged my £- euros a packet of nappys cost double what they do in the uk, and simple things like a beer costs twice as much.
I dont know how it survives but with countrys like france-germany and italy in the euro with the likes of turkey – latvia – poland – slovakia in the future i dont think there currency will collapse, if anything in these tough economic times it has only got stronger.
The point in the euro is to make it stronger then the usd and make it the main currency of the world -
Oigal says:
The point in the euro is to make it stronger then the usd and make it the main currency of the world
..chuckle
Don’t go hocking the home into Euros just yet guys.
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China ‘dumping’ goods into the Indonesian market also brings the prospect of inferior and/or defective products. Smuggling out of Indonesia for a substantial markup would also contribute to the recession.