RI stability leads to investment boom

The Jakarta Post, Jakarta | Sat, 03/31/2012

Gains in macroeconomic and political stability in Indonesia have unleashed a level of consumer and business confidence unseen in decades that has led to a consumerism and investment boom, said a senior Deutsche Bank economist. Taimur Baig, Deutsche Bank’s chief economist for Indonesia, India and Singapore, was speaking on the sidelines of the Deutsche Bank Asia Pacific Advisory Board (APAB) meeting in Jakarta on Thursday.

“After a decade of leveraging following the 1997/98 financial crisis, the Indonesian economy is today characterized by low household and public sector leverage, favorable demographics, a rich commodity base, and an ‘aspirational’ and growing middle-class,” said Baig. “Indonesia has appeared to hit a sweet spot in recent years — its time has come,” he said, adding that Jakarta was a fitting host city for the two-day APAB meeting given the growth in both the local economy and the scale of Deutsche’s business in Indonesia.

The meeting brought together members of Deutsche’s senior regional management team, including CEO Robert Rankin and incoming co-chief executive officers Gunit Chadha and Alan Cloete. The appointments of Chadha and Cloete were announced in March, along with the new co-head structure that will allow Deutsche to engage even more effectively with top clients and regulators across the region and allow for future Asia expansion. Earlier this year, Baig announced that he expected the Indonesian economy to grow by about 6 percent in 2012, despite global growth slowing.

“As Indonesia consolidates its credentials as ASEAN’s most populous and fastest growing economy, it will need to take a lead on regional economic matters,” said Baig. “Intra-regional trade will become more critical with a slowdown in demand from Western countries. From fostering free trade in Asia to deepening ties with China, there are numerous economic issues of importance in which Indonesia could take a lead.” Baig said that while consumerism, investment and imports continued to rise within an environment of robust growth, concerns remained about inflation, notably an impending increase in fuel prices and electricity rates.

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