Indonesia Topics

As Indonesia faces accelerating inflation that may trim the country’s expected economic growth, the House of Representatives’ financial commission approved Monday chief economic minister Boediono as the nation’s 13th central bank chief.

The decision was made through a vote after the commission held “fit-and-proper” test to examine Boediono’s vision and mission for leading Bank Indonesia (BI).

Boediono, the coordinating minister for the economy, received votes from 45 of the 46 lawmakers attending the Commission XI selection panel, which previously rejected President Susilo Bambang Yudhoyono’s two central bank governor candidates.

The House is slated to confirm the appointment at a plenary session on Tuesday, or by April 10.

Boediono will succeed Burhanuddin Abdullah, whose five-year term expires May 17.

During the assessment session, the 65-year-old former Gadjah Mada University economics professor said he would improve BI’s role as monetary stabilizer as well as fix the long-stalled communication with top government economic officials.

“To achieve that, BI will have to mend its relations with the government, especially with authorities responsible for the distribution of goods and with regional institutions.

“In terms of monetary and financial policies, the most urgent thing to do is finish drafting the bill on financial safety nets,” said Boediono, a Wharton-trained economist who is known for his impeccable integrity and competence.

The bill, he said, would provide the country with detailed procedures on how to make decisions relating to monetary, banking and fiscal matters during financial turmoil.

The commission concluded Boediono’s knowledge and blend of experiences while acting as finance minister during Megawati Soekarnoputri’s administration from 2001-2004, deputy governor at Bank Indonesia from 1996-1998 and state minister for development planning, made him a suitable choice to strengthen cooperation and coordination in an environment of high inflation.

His record, the commission said, would greatly help the integrity and credibility of the central bank, which has been beleaguered by several corruption cases with its outgoing Governor Burhanuddin Abdullah and two other senior executives recently declared corruption suspects.

Presidential spokesman Andi Mallarangeng said the government was content with the House’s acceptance of Boediono.

“We have heard from the House that Pak Boediono was supported by some 45 House members. This is a good sign the President has proposed an appropriate figure for the position,” Andi said.

Regarding Boediono’s replacement, Andi said the President was still undecided.

Boediono was appointed the coordinating minister in December 2005, replacing Aburizal Bakrie who was deemed responsible for plunging the country into a minor economic crisis. (The Jakarta Post)

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono has expressed hope that the people and all concerned parties in the country would remain calm in the face of the current world economic turbulences that were affecting the national economy.

“I have to tell the people and all parties in the country that we and the House of Representatives (DPR) are still able to control the situation. We are also still formulating a credible and sustainable a revised 2008 state budget. We are still able to overcome the economic problems we are facing now,” the president said here on Thursday.

The president made the statement after a meeting with Coordinating Minister for Economic Affairs Boediono, Finance Minister Sri Mulyani, State Enterprises Minister Sofyan Jalil, National Development Planning Minister/National Development Planning Board Chairman Paskah Suzetta, state-owned bank BNI presdient director Gatot Suwondo and Bank Mandiri president director Agus Martowardoyo.

Yudhoyono said the meeting with the ministers was about a government policy to assist the poor and relatively poor members of society who were affected by increases in world oil and food prices.

“The impact in the country of the global food price hikes has led us to think of using funds from the state budget for poverty alleviation programs in an effort to assist the people,” he said.

The president also said the 2008 state budget had remained under control and able to meet its functions in financing general administration activities to stimulate growth and improve the people`s welfare, including the implementation of social safety net programs.

He said t the chief economic minister, the finance minister and the governor of Bank Indonesia (BI) would soon explain this to the people and the market so that they would remain calm in the face of the current global world economic turbulences. (Antara)

Jakartans are among the nation’s most generous people when it comes to helping out those in need, according to the results of a survey announced Wednesday.

In a survey of 11 major cities, residents of Jakarta, Semarang, Surabaya and Makassar ranked first when it comes to giving to family, friends, beggars and people in need, respectively.

The survey, by the Public Interest Research and Advocacy Center (PIRAC), was conducted at the end of 2007, involving a total of 2,500 respondents, said researcher Hamid Abidin.

The survey found, among other things, 43.7 percent of all respondents have a special budget for donations, almost triple the 16 percent in surveys conducted in 2000 and 2004.

Among the total respondents, 99.6 percent said they had given a donation in the past year, a slight decrease from 99.8 percent in 2004 but higher than 98 percent in 2000.

The amount of money respondents said they allocated for donations, however, was up from Rp 663,661 (US$69) per person per year in 2004 to Rp 767,272.

“There has also been a change in people’s motivation to donate, where it is no longer just the conventional religious or cultural obligation. We saw an increase in public donations to economic empowerment programs, legal advocacy as well as for the development of arts and culture,” Hamid said.

“The potential (for donations) grows as more people become aware of what they can do to help others and the environment. But this has not yet been tapped by the government or organizations in need of funding for their social and environmental programs.”

The survey, called The Pattern and Potential of People’s Donations, was supported by the Indonesian Philanthropy Association (PFI) and the Ford Foundation.

A significant increase in donating was seen in Jakarta, Semarang and Pontianak, while respondents in Manado, Balikpapan, Medan and Surabaya were less interested in donating compared to the 2004 survey. Denpasar remained relatively unchanged from one survey to the next.

Eighty-two percent of respondents in Jakarta gave money to relatives in need, an increase from 76 percent in 2004 and 63 percent in 2000; 95 percent gave to street beggars while 66 percent gave to natural disaster victims or to people they had never met who were in need of assistance.

“The donors, however, prefer to meet the recipients directly … either because they don’t trust the aid organizer or the non-profitable organization managing the money for their programs,” Hamid said.

PFI chairman Ismid Hadad said donor education was needed to increase people’s awareness of the importance of donating to strategic, long-term programs.

“Both donors and organizations managing the funds must learn that transparency and accountability in the use of donations will ensure the sustainability of public donations.

“As an incentive, the government could consider giving the donors tax deductions or tax exemptions,” he said.

Currently, only Muslims giving annual alms enjoy a 2.5 percent income tax deduction.

Giving to people in need

1. Makassar 69%
2. Jakarta 66%
3. Bandung 66%
4. Semarang 62%
5. Surabaya 60%
6. Padang 56%
7. Medan 47%
8. Pontianak 44%
9. Manado 40%
10. Balikpapan 36%
11. Denpasar 33%

Source: PIRAC, 2007

The Jakarta post

Respected for his record in leading the country’s economy during hard times and his highly admired integrity, Coordinating Minister for the Economy Boediono is regarded by most as the strongest candidate to head the central bank.

In a discussion Monday held by Indonesian Corruption Watch, economists were hopeful President Susilo Bambang Yudhoyono would include Boediono among the list of candidates to head Bank Indonesia submitted to the House of Representatives.

“With his inflation-targeting framework, Boediono is a suitable candidate to lead Bank Indonesia,” said economist Yanuar Rizky, adding the senior “technocrat” already had ample experience in dealing with monetary and fiscal affairs.

When serving as finance minister under the administration of president Megawati Soekarnoputri, Boediono stabilized the country’s macroeconomic indicators, including inflation.

Boediono was persuaded by Yudhoyono to manage the economy as coordinating minister for the economy, replacing Aburizal Bakrie, following a “mini” financial crisis in 2005.

Analysts attributed the 2005 crisis to poor economic management by the economic ministers, including former finance minister Jusuf Anwar, who was later dismissed and replaced by Sri Mulyani.

A. Prasetyantoko, an economist at Atma Jaya University, was optimistic Boediono would win a head-to-head competition against any other candidate during the House selection process, including against Bank Indonesia senior deputy governor Miranda S. Goeltom.

Besides being more senior than Miranda, Prasetyantoko said, Boediono had an advantage due to his integrity and record as an honest official.

“The BI governor must have integrity and credibility. He or she should be able to ‘tame’ the market,” said Prasetyantoko.

According to sources at the Presidential Palace, several steps were envisaged should Yudhoyono nominate Boediono and his nomination was endorsed by the House.

Among the proposed steps, Finance Minister Sri Mulyani could take Boediono’s seat as coordinating minister for the economy, with the director general of taxation, Darmin Nasution, possibly filling Mulyani’s position.

An alternative proposal would be to give Vice President Jusuf Kalla de facto authority to take on the economic minister’s responsibilities. Mulyani, who is needed by the government to help stabilize dwindling fiscal sustainability, would remain as finance minister.

Energy and Mineral Resources Minister Purnomo Yusgiantoro might also be considered for Boediono’s position.

Current Bank Indonesia Governor Burhanuddin Abdullah is set to leave his position May 17.

President Yudhoyono is expected to submit the governor candidates to the House this week before lawmakers recess for a month from April 12.

House Commission XI for financial affairs on March 18 rejected Yudhoyono’s first two candidates, Bank Mandiri president director Agus Martowardojo and PT Perusahaan Pengelola Aset vice president Raden Pardede. (The Jakarta Post)

Jakarta (ANTARA News) - Indonesia’s trade surplus dropped to $2.71 billion in February from $3.48 billion in January as exports fell from their all-time high, Central Bureau of Statistics deputy head Ali Rosidi said

Exports dropped to $10.53 billion dollars in February, 4.9 percent below the all-time high they hit in January, but rose 28.5 percent from a year before, he said.

The fall in exports was driven by a drop in the value of crude palm oil shipments to $1.04 billion from $1.6 billion in January.

Imports rose 2.9 percent to $7.82 billion from $7.6 billion.

Nine economists surveyed by Thomson Financial News were expecting a February trade surplus of between $3 billion and $4 billion.

They were expecting exports in a range of $10.08 billion to $10.99 billion and imports in a range of $6.06 billion to $8.17 billion. (*)