By theory, capital
investment would flow in to countries rated as highly prospective in economy
for middle or long term investment. Over the past two or three years, foreign
capital had been flowing in to the new emerging economies in Asia. Indonesia
was no exception foreign investments, portofolio or direct investment, stormed
in.
In regard to that matter,
the Financial Service Authority (OJK) rated that foreign investment entering
the domestic market through 2013 was implementation of foreigners' appreciation
for Indonesia's capital market. There were some reasons why foreign investors choosed
Indonesia as investment destination. Among them was unpromising globe sentiment.
Data of the Indonesia Security
Exchange (BEI) had it that net buy of foreign investor through 2013 was Rp 10.77
trillion or increasing by 81.30% against same period the year before. As
reference, during transaction last Thursday (14/2) foreign investors booked net
profit of Rp 357.2 billion.
As known, growth of US
economy was below expectation, so the US authorities were still implementing low
interest policy to propel their economy. In addition to that, debt in crisis in
Europe was still clawing which slowed down their economic growth. Under such
circumstances global investors would avoid making returns from investment in
the two regions.
It should be borne in mind
that the problem in Europe was structural and would take a long time to solve.
A condition as such would drive investors to other countries where the
fundamental economy was better, i.e. the emerging economy like Indonesia. Admittedly
Indonesia's economic growth in 2012 was only 6.23%, a little less than
expected. Somehow a growth above 6% was notable and much higher than that of
developed countries.
Indonesia's fundamental economy which was
positive made net buys not only happen in the stockmarket but also in
promissory notes. This trend of capital inflow would predictably still happen
for a long time, because economic problem in the US and Europa might need
recovery time which was not instant. What was being expected was certainly
foreign capital inflow which was more then just portofolio but something impactful
such as driving companies to run Initial Public Offering in the capital market.
An act as such would invigorate the domestic market and jack up the market
capitalization.
It was expected that entry
of foreign capital would bring positive chain effect on the real sector in Indonesia.
It was important to make sure that the heavy capital inflow was not bubble
economy that might pop off in a split second. Nevertheless authority of the
financial sector must remain to keep watch on the development of industry in
tandem with other institutions combined in the Financial System Stability Policy
Forum (FKSSK).
So far FKSSK already had
the Crisis Management Protocol (CMP). So FKSSK would anticipate any sudden
occurrence if any foreign investor withdraw their capital resulting in
stockmarket slump. It was still a tolerable thing that today regulators did not
set any limit for investment as their role was somehow still needed among others
to jack up Indonesia's economic growth.
Restriction on any foreign
investor would but bring negative impact if perceptions of foreign investors of
Indonesia turned negative. In a condition where economy in other parts of the
world were adverse, it should be seen as a golden opportunity instead to draw
more and more foreign investment.
Lest year's foreign capital
inflow which chalked up investment of over Rp 300 trillion was expected to
continue this year, projected to reach Rp 300 trillion. Amidst Government’s
hard effort to build big scale infra-structure project, the presence of foreign
capital might come in handy. It was also not ignorable fact that performance of
the local stockmarket was making their marks as indicated by progress in stockmarket
(IHSG) index which broke through above 4,500.
Assuming that projection of
Indonesia's economy over the year was better then lest year, it was not
impossible that IHSG's projected index of 4.750 could be attained. Hopefully
there would be no sudden disturbances which caused sudden capital flight
because investors were not getting enough attention. As with the political
quarrels and uproar in the mess media recently, let them be the cream of
democracy as long as they don't bring negative impact on economy.
To learn from experience of
the Presidential election of 2004 and 2009 which ran safely, peacefully and
orderly, let them be the benchmark for expectations of the coming political
feast of 2014 which would hopefully be just as peacefully and orderly.
Economic players have a world of their own and politicians live in a world of
their own. Decoupling process should run naturally without fabrication.
Those were illustrations
that foreign capital was believed to be embracing Indonesia with all their
positive points as basically Indonesia is highly prospective and highly
potential for fruitful investments.
Business News - February 20,2013
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