ASEAN KEY DESTINATIONS
US Financial Bailout
Failure won’t affect Indonesian economy - Govt
Indonesian government says the possible failure of the US bailout bill may not pose a threat to Indonesia’s economic fundamentals, despite global fears that the United States, the world’s largest economy, may plunge into grave recession, reported local daily the Jakarta Post.
Strong banking performance, robust commodity exports and less developed capital market products are cited as key reasons for optimism in keeping the country’s economic pillars sturdier than in the days of the late 1997 Asian financial crisis.
Vice President Jusuf Kalla said Indonesia could well absorb the impact of the US woes on the back of strong exports of commodities in high global demand, regardless of any shakeup in the global economy.
“It’s impossible that the world does not need our commodities,” Kalla said Wednesday as quoted by Antara.
“Regardless of the degree of the crisis in the U.S., the world still needs oil, coal, textiles and palm oil.”
He added he believed China could be affected more severely because of its reliance on the export of manufacturing products, for which demand is likely to decline due to lower purchasing power in the U.S. and Europe.
Non-oil and gas exports surged to $54.38 billion in the first half of 2008, a year-on-year increase of 23.2 percent, thanks to higher worldwide commodity prices, data from the Central Statistics Agency (BPS) shows.
These exports made up 77.19 percent of Indonesia’s $70.45 billion of total exports.
Southeast Asia’s biggest economy is also a major exporter of tin, cocoa, coffee, nickel, copper, gold, rubber and vanilla.
On Thursday, the US Senate approved a $700 billion financial bailout bill, hoping to ease a deepening credit freeze and volatility on global stock markets spawned by the crisis on Wall Street, AFP reports.
However, the decision to pass the bill remains with the House of Representatives, which on Monday rejected the bill.
Indonesian Finance Minister Sri Mulyani Indrawati echoed Kalla’s optimism, saying the country’s banking sector was in a healthier state than it was prior to the Asian financial crisis.
“Economic growth, as well as monetary and banking stability are relatively stronger since our recovery (from the crisis),” she said.
Key indicators in the domestic banking sector reflect this outstanding performance.