Today some sort of polemic
was going on whether Indonesia had entered the state of crisis or not. By
theory monetary crisis was indicated by depreciation of Rupiah value against
USD, negative Balance of Payment, letter of Credit of national banks not
accepted by foreign banks and increasing amount of money in circulation.
In monetary crisis, normally accompanied by crisis in
banking, marked by the following indicators: there were banks which failed, BI
rate increasing within a short time, fixed deposit interest of banks also rising
drastically, banks unable to fulfill obligations to creditors.
Accumulated monetary crisis and crisis in the banking
sector boiled down in economic crisis, as signified by the following: credit
interest rate extremely high in respond to increased SBI or BI rate, stagnation
happening in the real sector, mass dismissals happening the real sector.
To refer to the above definitions as benchmark, it might
be concluded that Indonesia as today no in the state of crisis. However high
alert by the Government and all authorities and regulators were still
necessary. In short, all parties must not be on the off-guard.
Signs of economic weakening was beginning to be felt in
2012 last when economic growth fell to the level of 6.23%, lower than that of
the previous year at 6.5%. in the past 2 years, economic growth was still at
above 6%, perhaps only outsmarted by China [8.5%] and India [7%].
World’s compliment was addressed to three countries which
escaped crisis that smashed the world, namely China, India and Indonesia. The
reason was that the three countries posted notably high growth percentage
amidst the threat of world’s crisis in 2008. Investors from developing nations
flew in to Indonesia as Indonesia was rated as the safest place to invest
amidst grave economic condition in Europe and America.
Since 2008, national economic stability had been well
secured, with national economic growth rate consistently managed at above 6%.
At the Stock Hall, index of IHSG was once something to be proud of, touching
the level of above 5,000.
Unfortunately, lately Indonesia’s fundamental economy had
to face great challenges. The negative sentiment came from economic uncertainty
of the world and monetary policy in the USA related to Quantitative Easing part
III. At home, inflation soared up in line with oil price increase on June 2
last which jacked upon inflation of July by 3.29%, the highest since 2008.
National economic growth rate was also corrected to below 6%, to be exact 5.8%
in Semester I 2013.
Lately, IHSG index was shaken, nose diving way below its
highest level, while foreign capital was on the walk out in large scale. Acts
of selling spread out only to drop premium shares down. Rupiah was drawn
downward. Rupiah value collapsed helplessly against strengthening USD.
Some circles were worries about the present national
economic condition. Downfall of Rupiah value reminded people of the bad times
of 1998. It was known as the darkest hour in the history of national economy.
Many economic observers stated that crisis was always possible if the
Government was not on the alert.
The Government was compact to cast aside the notion that
the condition of today was the same as that of 1998. So far the condition of
Indonesia’s fundamental economy today was by far better than 1998. Even to
compare against 2008, what was happening today was safely under control.
Coordinating Minister Hatta Rajasa and the Financial
Service Authority [OJK] were also compact in saying that the present condition
was far from the danger of crisis. the same was disclosed by Finance Minister
Chatib basri that compared to 1998, the condition then was by far more grave
than the present condition. So the year 2013 was not comparable to 1998 or
2008.
The question lingered on, are we now on the brink of
crisis as in 1998 and 2008? Some indicators could serve as reference to see the
similarity of the present condition with that of 1998 or 2008.
Firstly, Rupiah exchange rate value weakened. In 1998
Rupiah was on a free fall to Rp 17,000 per USD. It was a steep downfall against
the pre-crisis moment of 1997 when Rupiah exchange rate value was Rp 4,850 per
USD. In mid September 2008, severe condition effect on Rupiah. Rupiah value
noise-dived to Rp 11,711 per USD in November 2008 which was an extremely deep
depreciation of Rupiah, because only a month before Rupiah was at Rp 10,048.
Per USD.
In August 22, 2013 last Rupiah value slumped toRp 11,000.-
per USD and was predicted to sink even deeper in line with the QE part three to
be exercised by the US Central Bank. Rumors spread out that the QE 3 policy
would be stopped by stages in line with bettered US economy.
Secondly, IHSG index sank quite deeply. On the brink of
economic crisis of 1998, the stock market was shaken. IHSG fell to its lowest
point: 292,12 point in 1998 against Semester I 1997. Dow fall of IHSG was also
happening today. OJK noted that in spite
of falling, the slump was only around 4%-5%. According to OJK, if IHSG fell by
10% in 3 consecutive days, only then it could be defined as crisis.
On August 19, 2013 IHSG was closed to weaken by 255.14
points or 5.58% to the level of 4,313; while on August 20, IHSG was again
closed to drop by 138.54 points to the level of 4,174 but on August 21 again
IHSG moved up to 43.47 points or 1.04% to become 4,218. Lastly during
transaction on August 22, IHSG again weakened 1.19% to the level of 4,168.
Thirdly Non Performing Loan was at large, soaring up sky
high in the crisis of 1998. NPL was posted at 30%. Today in 2013, NPL was still
below 5%. Banks were ask to refrain from jacking up credit amidst economic
slowdown. If banks persisted to grow by jacking up credit, it might trigger
another problem, i.e. NPL.
Fourthly, high inflation pressures during the crisis of
1998 was extremely high: inflation in 1998/1999 was posted at 45.9%, while
inflation during crisis of 2008 came to 12.4% in September, being jacked up by
increasing world’s oil price which led to Government’s policy to increase oil
price.
The same condition was happening today in this year 2013:
increased oil price triggered notably high inflation.
The Central Statistics Board [BPS] predicted inflation of
2013 to reach 3.29%. inflation through January-July soared above 6.75% with
yearly inflation [July 2013 against July 2013] at 8.61%. Yearly inflation was
posted as highest since 2009. As with monthly inflation, July was the highest
since 1998. Inflation still continued in August at 1.12% resulting in calendar
inflation at 7.94% [ytd] and annual inflation of 8.79% [y o y].
Fifthly banks were having liquidity problem. The banking
sector was smashed by crisis in 1998. Consumer’s trust in banks declined. Liquidation
of banks without considering customers’ panic was the beginning of unrest in
the banking sector when crisis came.
Customers panic had drained bank’s financing resources.
Banks liquidity dried up, forcing BI to inject liquidity facility. Today the
condition was nit as bad as 1998. Bank’s liquidity was more influenced by BI’s
policy to lower LDR from the previous 100% to 92%. This would force banks to
maintain their liquidity with the consequences of fighting for people’s limited
fund.
From the above picture it might be concluded that the
condition of today was for from economic crisis. one of the indicators was that
the business world was still operating, bank’s credit still extended, IHSG
showing upturn, and Rupiah beginning to strengthen.
All
were the direct impact of BI’s policy and the Government Four Policy Package.
Apparently indicators of macro economy was getting better as the National
Crisis Protocol was set ready to prepare for the worst.
Business News - September 6, 2013
