Indonesia'€™s economy has a better outlook this year than its peers in the emerging markets despite facing ongoing global risks and domestic challenges, CIMB Niaga'€™s top executives have said.

CIMB Niaga president director Tigor Siahaan said the domestic banking industry had a more positive outlook this year as global investors were showing positive sentiments lately, which was indicated by high inflows to the country'€™s financial markets.

He said, for instance, at leastRp 20 trillion (US$1.47 billion) flowed into government bonds in 2015 alone, which also helped the rupiah appreciate slightly.

As the government commits to boosting spending and continues to deregulate this year, investors see that Indonesia'€™s '€œstory'€ is centered on infrastructure development, which is a long-term investment, he said.

'€œWe see that the positive sentiment from global investors is already there and they want to invest here. However, they see Indonesia as a long-term investment that will keep going for around 20 to 50 years to come,'€ Tigor said after the bank'€™s economic forum on Thursday.

Tigor said positive sentiment in industries also increased gradually in the first and third quarters last year as shown by upticks in some sectors that became the country'€™s leading indicators for economic growth, such as cement manufacturing.

Positive growth in major industries, he said, could create trickle-down effects for other sectors and sub-sectors in the periphery, which in turn would help boost the economy.

According to Tigor, such domestic improvements may help the country to avoid external risks caused by global economic issues, including China'€™s slowing economic growth and its yuan depreciation, which could trigger more turbulence in the future.

'€œFrom a banking point of view, I'€™m cautiously optimistic, because there are a lot of global issues, but I feel that the government is doing the right thing now,'€ he said.

CIMB Group economist Arup Raha said in the event that China'€™s changing economic structure, from investment-driven to consumption-driven, reshaped the global economy, the question would be could we expect a '€œsoft or hard landing'€.

However, Raha said Indonesia had the potential to grow better than the average emerging market this year as the government and Bank Indonesia were working on comfortable interest-rate levels as well as current account and budget deficits.

'€œIndonesia has a good story and is still attractive as the government is changing many regulations and is very active in inviting foreign direct investment. We are optimistic with the focus on infrastructure development,'€ he said.

CIMB Niaga strategy and finance director Wan Razly Abdullah said the bank would direct its focus toward growing small and medium enterprises and consumer segments, while being '€œselective'€ on corporate loans due to lingering effects of the weak economy.

The bank saw profit decline from 2014 to third quarter last year due to sharp increases in non-performing loans caused by a plunge in commodity prices and a slow economy.

CIMB Niaga predicts that its loans will see growth of below 10 percent this year, or rather flat compared to around 9 to 10 percent targeted by the end of last year.

'€œThe first half of this year will still feel a slowdown, but we'€™re optimistic about the second half, because the government'€™s incentives will start to take effect,'€ Wan Razly said.

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