Again Indonesia showed supremacy in economy in the world with attained
growth of 6.23% in 2013. However there was no longer any reason for Indonesia
to show off as the second highest growing economy next to China [7.8%] as
Thailand surprisingly was able to chalk up economic growth of 6.4% meaning
Thailand had outsmarted Indonesia. This was the great challenge to meet so the
Government did not have to sit on their laurels and be off guard.
Now was the momentum to maintain the good record; chances of attaining growth
above 6% was still wide open, at least as signaled by 6.2%growth in quarter
I/2013, an increase against growth of the previous quarter at 6.1%. as whole
national economic growth in 2013 was projected to be in the range of 6.3% -
6.8% - which was the consensus figure of economists.
However the projection of economic growth had to face many challenges
which called for immediate and through handling. Firstly, Indonesia’s Trade
Balance [NPI] which was still under pressure all year through till now. There
was no choice for the Government but to boost export and in tandem with that to
reduce import of raw materials and auxiliary goods.
The Government must also jack up domestic export-oriented industry to
aim sales at the emerging markets especially India and China. The economic
condition in India and China was changing for the better. Word was out that
Indonesia’s export to India had exceeded that to the USA. This was indeed
heartening amidst economic recovery in the USA. If export could be managed
properly, it was expected that pressures on Indonesia’s Balance of Payment
[NPI] could be minimized.
Secondly, since the very beginning there had been signals that inflation
would soar up. This was initiated by the decision of the Government to increase
Electricity Basic Price amounting to 15% all through the year. Although
increase of electricity tariff [TDL] was exercised gradually, the direct impact
and psychologal impact might jack up inflation.
Foul weather and flood in some regions which disturbed harvest or
distribution of commodities made supply to be restricted which triggered upjump
of commodity prices at consumers’ level. The prove was that the inflation level
of 2% was only in the first two months of this year.
For that matter the Government must manage the supply side which
contributed to Consumer’s Price Index at 5.7% [y o y]. Increase of food prices
which soared high with notation that inflation of volatile food reached 11% [y
o y] caused anxiety due to extreme weather which hindrance production and
distribution of food commodities like vegetables, fruits and dressing
ingredients.
Inflation control was absolutely necessary so future pressures could be
eased. The inflation Controlling Team
and the central and local level must work extra hard to ensure price
stability especially that of the food and beverages category. The upjump of
garlic price for example, must be solved the elegant way.
Thirdly, the threat of pressure on Rupiah was still continuing since mid
year till now. Last year the public was not convinced that Rupiah value could
drop to as low as Rp9,700 per USD. However since that level was finally
touched, the public were beginning to believe that Rupiah might slump to even
as low as Rp10,000 per USD.
At this point, the measures taken by BI so far to maintain benchmark
rate at 5.75% was regarded as right amidst strong domestic demand and sullen
global economy due to helplessness of some developed nations to keep their head
above water in a long and winding economic adversity.
In times when other countries were striving to keep bank interest low,
BI rate of 5.75% could help to drum up foreign capital to flow in to Indonesia
whereby to help to strengthen Rupiah. Beside setting benchmark rate, it was
necessary for BI to use other monetary instruments to maintain Rupiah
stability. BI’s policy to obligate exporters to deposit their export
proceeds in national forex liquidity at
home. Furthermore obligation for BUMN to buy USD from state owned banks was a
tactical move to protect Rupiah from over fluctuation in the market. Under
certain circumstances, BI must also make direct intervention to the moneymarket
to maintain market’s trust.
In the event that the above challenges could be met, it would probable
that economic growth could be attained between 6.3% and 6.8% according to
consensus, moreover to consider the great opportunity that Indonesia had.
Firstly, people’s purchasing power which was still strong which made the
domestic market still the pillar of growth. Secondly social and political
stability which was still under control.
Thirdly four of Indonesia’s trading counter parts America, Japan, China
and India had posted better economic performance. This positive signal would
naturally uplift export to the said countries. Beside the four mentioned
countries, there were four other countries which was showing economic rebound,
namely Taiwan, South Korea, Thailand, Malaysia and Singapore.
One thing was sure
there was not much to be expected from Europe as the economic recovery process
was still way below expectation. Somehow there was still silver linings in
cloudy Europe as four countries: Germany, England, Holland and France whose
economy were in the positive zone. (SS)
Business News - March 15,2013
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