This Is Why Indonesia Is Destined For Greatness In 2010

Posted on March 19th, 2010 at 8:34 am by Akhyari


The idea of Indonesia putting a second “I” in the BRIC acronym isn’t exactly new. But the performance of its exchange traded fund (ETF) in the last year should lend serious credence to the idea.

The BRICs – Brazil, Russia, India and China – earned the label by being the world’s fastest-growing economies. Perhaps there’s room for another letter in there after recent developments. After all, the Market Vectors Indonesia ETF (NYSEArca: IDX) is up 12.3% year-to-date and an astounding 221.3% since the market’s March 9, 2009, low. [Is Indonesia BRIC Material?]

Indonesia came out with a whole lot of good news, including a jump in the tax base, fresh foreign investment, rises in corporate ratings and earnings, a surging stock market and a strengthening rupiah, according to Jakarta Globe.

The Jakarta Composite Index and the rupiah surged after the U.S. Federal Reserve promised to keep interest rates low, which prompted foreign funds to continue a buying spree.
Finance Minister Sri Mulyani Indrawati said that more than half of the registered taxpayers have submitted their tax returns for the year; this is huge, since taxes account for about 70% of state revenue.
Four Australian companies have agreed to invest more than $1 billion to expand businesses in Indonesia this year.
National flag carrier PT Garuda Indonesia expects net profits to rise by 15% this year on strong passenger growth. Standard & Poor’s raised the corporate credit ratings of state-owned firms PT Perusahaan Listrik Negara, PT Perusahaan Gas Negara and PT Telekomunikasi Selular.
Indonesia’s Central Bank raised its 2011 growth projections to as much as 6.5% on accelerated consumer spending from earlier estimates of 6%, reports Novrida Manurung for BusinessWeek. The Central Bank also increased its 2010 growth estimates to 5.6% from 5.2%. Inflation may average between 4% and 6% for the year.
President Susilo Bambang Yudhoyono has pledged $140 billion over the next five years for spending on roads, seaports and airports as part of a push to deliver GDP growth of at least 6.6% by 2014.
President Barack Obama’s plans visit to Indonesia to help spur market-oriented reforms that could boost trade between the United States and Indonesia and create more U.S. jobs by growing market access, reports Doug Palmer for The Washington Post. Chinese Premier Wen Jiabao will also be visiting Indonesia just weeks after Obama, which is seen by some observers as a healthy dose of competition between Washington and Beijing.

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