BRIC Should Include Indonesia, Morgan Stanley Says

[Nining_Meida]

BRIC Should Include Indonesia, Morgan Stanley Says

By Arijit Ghosh



June 15 (Bloomberg) -- Indonesia’s economic growth may accelerate to 7 percent starting in 2011, providing a case for its inclusion in the so-called BRIC economies along with Brazil, Russia, India and China, Morgan Stanley said.

Political stability and buoyant domestic demand will help boost expansion in the $433 billion economy, Morgan Stanley said in a report dated June 12 that compares Indonesia with India. President Susilo Bambang Yudhoyono is expected to win the July 8 elections, polls show.

“What this means for the investor community is that they need to look at this asset class more seriously,” Chetan Ahya, a Singapore-based economist at Morgan Stanley, said in an interview today. Political stability, improved government finances and “a natural advantage from demography and commodity resources are likely to unleash Indonesia’s growth potential,” he said.

Southeast Asia’s largest economy may grow 60 percent in the next five years to $800 billion due to a stable administration, lower capital costs and a government plan to spend as much as $34 billion to build roads, ports and power plants by 2017, Morgan Stanley said. Leaders of the nations known as BRIC will meet this week in the Russian city of Yekaterinburg.

Indonesia may expand as much as 4 percent this year, making it the fastest-growing major economy in Southeast Asia, according to the International Monetary Fund. Morgan Stanley expects 3.7 percent growth this year.

Economic growth of 7 percent starting in 2011 is “possible and achievable,” Finance Minister Sri Mulyani Indrawati told reporters in Jakarta today.

Presidential Election

Yudhoyono may win an overall majority in next month’s election, avoiding the need for a second round of voting in September, polls show. Yudhoyono’s Democrat party won more than 25 percent of seats in parliamentary elections this year, becoming the only party to be able to nominate a presidential candidate without seeking outside support.

The 2009 parliamentary election results “suggest continued stability in this democratic political framework and is a critical factor in unleashing Indonesia’s growth potential,” Ahya said. “Coincidently, the India story has also recently been given a fillip from the strong political mandate of the Congress-led coalition in the 2009 general elections.”

Indian Prime Minister Manmohan Singh’s Congress party won the most seats in parliament since 1991 in results announced last month.

Higher Education

Indonesia still lags behind the BRIC economies in the quality of higher education, which is “crucial in moving the economy up the value-added ladder,” Ahya said in the Morgan Stanley report.

“We still have a problem with the supply side, especially infrastructure and human capital,” said Destry Damayanti, chief economist at PT Mandiri Sekuritas in Jakarta. The nation may not be able to exceed 7 percent economic growth starting 2011 until the investment and education infrastructure is upgraded, Damayanti said.

Leaders of the BRIC nations may use their first summit on June 16 to press the case that their 15 percent share of the world economy and 42 percent of global currency reserves should give them more influence over policies.

Developing countries say their votes in the IMF, founded at the end of World War II to promote global trade, don’t reflect the shift in economic power. Brazil, the world’s 10th-largest economy, has 1.38 percent of the IMF board’s votes, less than 2.09 percent for Belgium, an economy one-third the size.

The BRICs may overtake the combined $30.2 trillion gross domestic product of the Group of Seven nations by 2027, Jim O’Neill, the London-based Goldman Sachs Group Inc. chief economist who coined the term for the four countries in a 2001 report, has said. That is a decade sooner than he had forecast earlier.

http://www.bloomberg.com/apps/news?p...d=an1qRcALOx0k

Mat hebat ke! Indonesia boleh!

[Nining_Meida]

Wednesday, June 17, 2009 8:46 PM

Indonesia re-enters the club of fast growing economies

Riyadi Suparno , The Jakarta Post , Paris | Fri, 03/20/2009 1:10 PM | Headlines

After sinking deep during the financial crisis, Indonesia has now entered the club of the world's fastest growing economies, but it needs further economic reforms and liberalization to gain more from international trade.

The Organization for Economic Cooperation and Development (OECD), in its latest report "Globalization and Emerging Economies" released in Geneva on Thursday, includes Indonesia among the world's best performing large developing economies.

Indonesia now sits alongside Brazil, Russia, India, China and South Africa, in a group the OECD calls BRIICS.

"The inclusion of Indonesia into BRIICS is a recognition of the importance and size of the country, the situation relative to OECD member countries, and the desire of OECD countries to engage in it more closely," Douglas Lippoldt, acting head of the Development Division at the Trade and Agricultural Directorate of the OECD.

Des Alwi, an official at the Indonesian embassy in Paris, said the inclusion of Indonesia into BRIICS puts Indonesia back on the global radar as a future economic powerhouse following the financial crisis.

He also said the inclusion acts as recognition of Indonesia's relatively fast recovery from the severe financial crisis of the late 1990s.

The report said while Indonesia had not yet recovered to pre-crisis levels of growth, the national economy had done very admirably considering the sharp depreciation of the rupiah and the rise of oil prices.

The biggest drawback is Indonesia's international trade, which has been declining in proportion to its gross domestic product and global trade, as well as new constraints on business in the country. The increasing rigidity of the labor market, in particular, is of big concern.

Before the crisis, Indonesia's international trade had long been a key catalyst for growth, but since the crisis trade has played a much smaller role. The emergence of new competitors, or the fact the severity of the crisis affected the ability of firms to trade, could be two reasons for this change. Another factor is that Indonesia, which has the lowest tariff levels among the BRIICS nations, has become less open to international trade. The nation has been raising tariff barriers for agriculture, textiles and steel products. Since 2001, new non-tariff barriers have emerged and creeping protectionism has set in.

In addition, the recovery of the economy has not spread equally across sectors. Growth has been strongest in capital-intensive services, while labor intensive primary and manufacturing sectors are experiencing sluggish growth. This results in persistently higher unemployment.

High unemployment has also been attributed to the increasingly rigid labor market, where hiring and firing has become more expensive for businesses.

Indonesia, therefore, needs to continue deeply integrating into the world market and improve the investment climate to boost its attractiveness as a global production base. This way, with the momentum of high growth being sustained, it will remain relevant to the global economy.

As Indonesia becomes significantly more important economically on the world stage, the OECD has adopted an "enhanced engagement" process with the BRIICS countries, with the view being they will eventually become members.

OECD Secretary General Angel Gurria said that engaging Indonesia and other BRIICS countries was important for the OECD to maintain its relevance.

OECD countries' share in global trade has declined for several decades to just 60 percent, while the BRIICS countries' shares has increased to 30 percent.

"If we are not engaging BRIICS nations, we run the danger of becoming less and less relevant," Gurria told journalists from BRIICS countries at his office Thursday.

"Whether you are going to be a member or not, we say we are representing 60 percent *of global trade* and working closely with the other 30 percent, and therefore, we remain a relevant organization."

http://www.thejakartapost.com/news/2...economies.html

Indonesia boleh!

[Nining_Meida]

Only a matter of time

Goldman Sach, world's most respected investment banking group, once predicted that in 2010, Indonesia's GDP (purchasing power parity) would reach $800 billion. Guess what...Indonesia's GDP (purchase power parity) in 2007 already reached $ 948 billion.

Morgan Stanley, another world's top investment bank predicted that Indonesia's economy would top $ 1.5 trillion, and GNFI has a strong confidence that this is another under-prediction. Using 7-8% growth, $1.8 trillion is not really difficult to achieve.




Hmmm....that's more than enough for Indonesia to be in an elite ring called BRIIC (Brazil, Russia, India, Indonesia, and China). Analyst used to say that Mexico will join that club, but...hmmm...eventually, Indonesia is more eligible, in term of steady pace of economic growth and political stability.

What Indonesia needs to do now is :
- keep up this pace
- promote more
- inject more funding for infrastructure
- increase the export
- attract more visitors
- produce more Made-in-Indonesia products, and sell overseas
Yes, you got it....BRING MORE MONEY IN !

http://akhyari.blogspot.com/2009/06/...r-of-time.html