2013: ECONOMY IS NOT THE MAIN FOCUS

The above mentioned title is not a complicated conclusion because all parties would be busy to prepare for General Election 2014 as from this year. Efforts to preserve economy would become a second priority because internal war would heighten, at least in two political parties, namely Democrat Party and Golkar Party.

Unless President Susilo Barnbang Yudhoyono (SBY) is a part of the Democrat Party, national economic management still could be guaranteed but the fact shows that SBY has interest in “cleaning” issues encountering the party and struggle for the restora­tion of the party's image. Ass result, SBY would be difficult to focus on economic issues in two years to come.

Many argue that Vice President Budiono would take over economic affairs. However, the pow­er of Budiono in regulating cabinet ministers mostly general chairman of political parties or representatives of party coalition is under question. The argument is extremely rave and not based on political reality.

In view of the fact, we come to a conclu­sion: economy won't become the main priority of the government in 2013 and 2014. Yet, would it cause Indonesian economy to collapse? Before answering the question, we must observe first economic policies already taken by the government in the lest several years.

Viewed from the achievement, we must concede Indonesian economic performance is the best
in Asia, regionally or globally. US economy slowed down, China as global economic locomotive also encountered downturn but Indonesian economy soared.

What makes Indonesia immune to global economic crisis? There is only one reason, Indonesia is isolated from debt-receivable issue. The United State has debt to service ratio above 100%, so are European countries having debt to service ration above 150%. In the case of Indonesia, the ratio is only 30% so that Indonesia remains possible to more flexibly, driven by domestic consumption, relatively low debt and assisted by huge income from natural resources.

Why is the country isolated by debt-receivable net in the world? Firstly, many companies in the country have not access to global capital market. Secondly, if they have access, capability of Indonesia companies to obtain debt is also limited because they are still deemed risky. The condition causes Indonesia to not receive investment grade adequately.

 Does internal economic policy enable us to grow faster? Bank Indonesia clearly plays a great role in preserving the target of inflation and supervising the uncontrollable expansion of credits, mainly consumption credit. On the other hand, the Finance Min­istry also preserves cash flow with budgetary disci­pline so that economic growth is still preserved.

Is the real sector policy significant? Here, we could say, if any, it's extremely chaotic. Luckily, Investment still comes into the country even though infrastructure remains poor. What is the cause? Indo­nesian economy still grows because consumers are abundant and the condition encourages foreigners to come into the country in order to sell their products. Our domestic market is indeed the main reason en­couraging foreign investors to continue eyeing the country.

Now, we could answer the above-mentioned crucial question. Firstly, most of the Indonesian economic policies come into monetary category. In pre­serving the monetary solvency, Bank Indonesia has played great role whereas the central bank is not a government institution, and it’s also assisted by fiscal policy of the Finance Ministry. Secondly, Indonesia's debt structure enables the country to escape from global debt crisis. Thirdly, foreign investors contin­ue to eye Indonesia because the domestic consumer market is very huge.

It means Indonesian economy remains pos­sible to grow even though the government would be rather preoccupied by political affairs than eco­nomic issues, and the vacuum is filled by real policy. Economy could continue to grow by only preserving monetary and fiscal stability, accompanied by partial real-sector policies.

Nonetheless we surely suffer from loss be­cause Indonesia looses momentum to utilize the global economic trend to catch up backwardness in the economic sector when global economy is settling debt-receivable Issue. We should be able to grow faster when global economy recovers.

Jakarta, February 16, 2013

Business News - February 20,2013