The World Bank projected Indonesia's economic growth in 2014 at 5.3%, lower than 2013 at 5.3%. Vice President of the World Bank for East Asia and the Pacific reg
ion Van Trotsenburg stated that countries of the Asia Pacific region like Indonesia and Thailand were facing hard economic problem and higher overseas debt this year.
Trotsenburg disclosed that economic growth of the Philippines also slowed down to 6.5%, while developing countries in East Asia were growing by 7.1%. East Asia would be a region with fastest economic growth in the world in spite of having slowdown of 8% on the average from 2009 to 2013. In China, growth would show downturn to 7.6% against 7.7% in 2013.
Beside China, other developing countries in Asia would grow by 5.0% against 5.2% in 2013. Global growth which strengthened this year could help developing zones to steadily grow while adjusting to tight global economic condition.
Generally speaking the World Bank in the East Pacific region would have stable economic growth. This region had been the growth propeller machine of the world since global financial crisis. The growth was supported by economic recovery and market response to Tappering Off policy by the Fed in the USA.
Malaysia's economy would also grow by 4.9% in 2014. Export from Malaysia would predictably grow. However, the cost for paying debt and fiscal consolidation would be burdened on domestic demand.
From the above picture, the present or next Indonesian Government were demanded to respond to World Bank's view through relevant economic policy including fiscal policy which was right and measurable. Noteworthy was the statement of Finance Minister Chatib Basri that economic policy aimed at fiscal tightening was rated as not suitable for 2014. The point was that tightening policy run by the Government today was restoration plan to solve problems of 2013. In short, Indonesia could not go on making fiscal tightening.
According to Minister Chatib, in the medium and long term and onward supposedly the Government concentrated on the national supply side which would soon improve national fundamental economy. So it was about time to relax tight money policy.
Therefore one of the key solutions in uplifting national supply was evenly spread and fast development in infra-structure, hence adequate infra structure and upgrading of Human Resources in the next few years was vital and indispensable.
In regard to General Election, either for Legislative [April 9 2014] or Presidential [July 9 2014] were expected to make legislative members and President/Vice President who meet people's expectation including businesspeople. This signal was seen: when some names of Presidential candidate surfaced, the market responded positively.
Toward Legislative Election, the market was zealous. Investors kept accumulating shares. Similarly positive expectation of marketplayers of Election outcome made Rupiah to strengthen against USD. History had it that in 3 elections of the past index of IHSG always moved positively upward.
Meanwhile strengthening of Rupiah would still continue, but only very thin because of the Fed's factor who planned to tighten their money policy. So surplus of current transaction and controlled inflation contributed to Rupiah strengthening. For that matter, BI who maintained benchmark rate at 7.5% on April 8, 2014 last was rated as right.
So the Government must benefit from the dynamic economic pulsation triggered by the Election event. The General Election was rated as a good momentum to energize domestic trading. Transactions were high during election and so was activities of businessplayers, particularly in the sectors of micro and small-and-medium business [UMKM] which jacked up economy by around 2% -3%. The UMKM sector would produce in abundance various attributes and symbols of political parties to be used in political campaigns.
The textile and garment industry were energized to jack up national economy because the need for dress and costumes as well as party's banners, flags, T-shirts, hats, jackets and other campaign attributes would be in high demand. Unemployment would be minimized and this would reduce poverty. Money circulation would mount to fantastic amount, probably around Rp100 trillion trough various financing resources, Government of private. The Government must make the best of this momentum.
General Election had its multiplier effect and opened economic opportunities. Small home industries would supply campaign necessities and small restaurants would mushroom, the people would benefit from high money circulation.
Still the Government had to make the best of the momentum, i.e. to accelerate the infra structure building sector in all of Indonesia and to ensure peace and order during election, by involving the people to be active in maintaining security in the environment.
For the time being the Government had the asset to continue economic development during the legislative election than ran peacefully; this was a good start to run the Presidential election on July 9, 2014 next. If the election ran peacefully, it would be followed by a period of power transition which was also orderly and it would mean a good starting point for the next Government to continue the momentum of economic growth.
It seemed that inter-party coalition in the next Government was inevitable in view of the quick count outcome where no single party appeared as single majority to score above 20% of vote at the past Legislative Election, but the public expected coalition of not more than 3 or 4 parties only to ensure effective state administration. (SS)
Business New - April 14, 2014