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Domestic demand to cushion US woes
The Jakarta Post | Sun, 10/05/2008 3:43 PM | Business
The government is confident with the revised 2008 state budget, and says high domestic demand will cushion the negative impacts of the U.S. financial crisis that may lead to a decline in demand for Indonesian commodities.
Previously, the government and the House of Representatives' Budgetary Committee agreed in the 2009 state budget to an assumption that the economy would grow by 6.3 percent next year. This target was higher than the government's initial proposal of 6.2 percent.
"The 2008 state budget would not be affected significantly because domestic demand remains relatively high," State Minister for National Development Planning Paskah Suzetta said before an meeting at the Finance Ministry on Sunday.
Domestic demand, he said, could still be strengthened by increasing government spending, including on the procurement of goods and services.
He said Indonesia had to keep an eye on the liquidity crisis in the U.S., particularly its impact on Indonesian exports. Indonesia's exports to the United States have been forecast to decline because of the U.S. crisis.
"We have to be watchful of what is going on there despite the fact that our exports to that country account for only about 30 percent of our total exports," Paskah said, adding that redirecting export destinations was the most likely outcome.
Other steps, he said, could be to expand the government's social safety net (JPS) program, to not just direct cash assistance (BLT) for the poor.
"We will discuss the BLT issues with the House, and whether it could be extended for another three months in 2009," he said.
Paskah said restoring the public confidence in the U.S. economy, particularly in its financial sector, would take a relatively long time.
"It will take a long time. I expect it will take one to two years, or even five years to restore public confidence," he said. (and)
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Peter Reaves (not verified) — Mon, 10/06/2008 - 7:27am
I am a wholesaler from the US selling Indonesian silver jewlery to US retailers. I buy from suppliers in Celuk and East Java. I sell Indonesian jewelry at trade shows, but now I can't get orders because the price of silver in Indonesia is being kept 50% above the world price by the Indonesian government. As a result I am losing my business to Thai and even US manufacturers, who can produce for far less because they buy silver at the correct world market price. I have not placed any orders with Indonesian suppliers for two months because of this problem.