VIVAnews - The international investment management institution BNP Paribas Investment Partners, deemed that Indonesia’s economic performance throughout the first semester of 2011 is the best in Asia-Pacific.
This outlook was based on the performance of the composite stock price index (IHSG), foreign investments and domestic investments as well as other financial indicators.
“Indonesia’s strong points were backed by foreign investment, which reached its highest level in 2011, up to Asian pre-crisis level,” said BNP Paribas Investment Partners President Director Tino Moorrees in a market review titled the Impressive Progress in First Semester that VIVAnews.com received, Thursday.
From the aspect of composite stock price index, Indonesia showed an impressive performance in the first six months of 2011. The index’s peak was at the level of 3,888.6 or up 10.14 percent in US Dollar. This record surpassed the index of Asia Pacific Morgan Stanley Capital International (MSCI) apart from Japan.
Indonesia’s best performance in capital market sector was pushed by the appreciation of Rupiah’s exchange rate against the US Dollar by 4.6 percent, reaching 8.579.
Indonesia’s capital market also bore fruits from the low expectancy of inflation and good corporate income. Earlier than other countries in the region, Indonesia’s inflation hit its peak in January 2011, that was 7.01 percent, then it went down in June to 5.54 percent year-on-year.
The inflation performance was resulted from the high appreciation of Rupiah which was beyond expectation. This allowed Bank Indonesia to limit the interest rate hike to only 0.25 percent. “The trend of the low inflation in Asian market and better monetary cycle caused the constant capital inflow to Indonesia,” said Tino.
From the aspect of foreign investment, BNP Paribas viewed that Indonesia’s appeal made foreign direct investment (FDI) reached the level of 32.2 percent. This condition lowered the unemployment rate to the lowest level in history, that is 6.8 percent in February 2011.
The middle-upper class’ income which rose fourfold since 2003, the larger difference of income from that of China as well as investor-friendly policy also supported the capital inflow to Indonesia.
“The passing of Land Acquisition Law in the future and the potential of Indonesia’s credit increase to become an investment grade should support the 2012 market’s outlook,” said Tino.
Citing the International Monetary Fund (IMF) data, Indonesia’s economy, which grew twofold in the last five years and has become the 18th largest economy in 2010 with a Gross Domestic Product of US$707 billion have put Indonesia to be the third fastest growth after China and India.
Translated by Indah Lestari
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