INDONESIA, PHILIPPINES & VIETNAM WERE FAMED TO BE FOLLOWING THE JAPANESE GROWTH PATH... THEY TOOK THE COMPARISON TOO SERIOUSLY WE GUESS. BY VIRAT BAHRI
Also, these economies are plagued by the “huge dependence on exports and foreign capital,” according to Prof. Baladas Ghoshal, Visiting Senior Fellow, Centre for Policy Research, New Delhi. He laments how these economies, particularly Indonesia and Philippines, still face high income inequality (hence a weak domestic market), rampant corruption and deteriorating infrastructure.
As far as Indonesia is concerned, the dubious $670 million bail out of Bank Century last year has already raised suspicion about the true state of the country’s banking and regulatory system. The economy started to slow in the third quarter of 2008. Fitch analysts Ai Ling Ngiam and James McCormack, caution, “The rundown in the foreign exchange reserves position during H208 to help minimise the impact of extreme currency volatility, and the forecast decline in current external receipts attributable to weak external conditions, weigh down on Indonesia’s external finance ratios in 2009.” Net foreign buying dropped by around 32% in 2008. Thanks to that, CDS premiums on the Indonesian government widened to as much as 1400 basis points. Portfolio investments began to revive in early 2009, but direct investment inflows began to come down. The country’s capital and finance accounts posted a deficit of $2.4 billion in the second quarter of 2009. Instability has taken its toll on the rupiah, which depreciated to as low as Rp11,000 to the US dollar in the first quarter of 2009. With global trade expected to decline by around 9% in 2009, Indonesia faces further risks, as its exports for June 2009 were around $7.6 million, down by 27% yoy. “Indonesia’s export sector is undiversified and exposed to terms of trade shocks; commodity exports constituted (a rather high) 46% of CXR,” as per Fitch Ratings. In addition, the credit problem has been detrimental to growth. In its latest Financial Stability Review, Bank Indonesia, the country’s central bank, cautions, “Recently, Indonesia has faced increasing difficultly in the bank intermediary function, similar to the problems that persisted for years following the 1997/1998 crisis.” From a growth of 37% yoy in 2008, credit has grown by just about 2.1% yoy this year. Fitch warns that the government’s external solvency position is still “relatively weak within its peer group.”
Also, these economies are plagued by the “huge dependence on exports and foreign capital,” according to Prof. Baladas Ghoshal, Visiting Senior Fellow, Centre for Policy Research, New Delhi. He laments how these economies, particularly Indonesia and Philippines, still face high income inequality (hence a weak domestic market), rampant corruption and deteriorating infrastructure.
As far as Indonesia is concerned, the dubious $670 million bail out of Bank Century last year has already raised suspicion about the true state of the country’s banking and regulatory system. The economy started to slow in the third quarter of 2008. Fitch analysts Ai Ling Ngiam and James McCormack, caution, “The rundown in the foreign exchange reserves position during H208 to help minimise the impact of extreme currency volatility, and the forecast decline in current external receipts attributable to weak external conditions, weigh down on Indonesia’s external finance ratios in 2009.” Net foreign buying dropped by around 32% in 2008. Thanks to that, CDS premiums on the Indonesian government widened to as much as 1400 basis points. Portfolio investments began to revive in early 2009, but direct investment inflows began to come down. The country’s capital and finance accounts posted a deficit of $2.4 billion in the second quarter of 2009. Instability has taken its toll on the rupiah, which depreciated to as low as Rp11,000 to the US dollar in the first quarter of 2009. With global trade expected to decline by around 9% in 2009, Indonesia faces further risks, as its exports for June 2009 were around $7.6 million, down by 27% yoy. “Indonesia’s export sector is undiversified and exposed to terms of trade shocks; commodity exports constituted (a rather high) 46% of CXR,” as per Fitch Ratings. In addition, the credit problem has been detrimental to growth. In its latest Financial Stability Review, Bank Indonesia, the country’s central bank, cautions, “Recently, Indonesia has faced increasing difficultly in the bank intermediary function, similar to the problems that persisted for years following the 1997/1998 crisis.” From a growth of 37% yoy in 2008, credit has grown by just about 2.1% yoy this year. Fitch warns that the government’s external solvency position is still “relatively weak within its peer group.”
Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
