GREECE'S FINANCIAL CRISIS NOT TO AFFECT RI ECONOMY

By Andi Abdussalam

Jakarta, May 13 (ANTARA) - The financial crisis in Greece has so far had no serious effect on Indonesia's economy as reflected in the country's economic growth, upward investment trend and significant growth of industries in the first quarter of 2010.          "The economic turmoil that plagues Greece will be overcome soon so that it would not have serious impact on the global and Indonesia's economies," Senior Deputy Governor of Bank Indonesia (BI) Darmin Nasution said on Wednesday.           The impact of Greek financial crisis was only felt by the country's stock exchange but it was not too serious.           "The drop of the composite stock price index (IHSG) was triggered by global conditions as a result of Greece's financial crisis. Indeed there was a downward trend in stock prices. It was the influence of the same trend in Greece, Portugal and Spain. It is a trend in Europe," Chief Economic Minister Hatta Rajasa said last week.          The minister made the comments when the composite stock price index (IHSG) fell 112.7 points or 3.18 percent to the 2,846 level and the weakening of the rupiah from Rp9,020 to Rp9,110 per US dollar.          He said the decline in the stock price index would not continue because Indonesia's economic fundamentals were still well maintained.          According to an AFP report, Greece has been facing financial crisis with an overall public debt of about 300 billion euros (399 billion dollars).  The Greek debt drama has mushroomed into the biggest crisis in the euro's 11-year history, sparking concerns that it could spread to other weak members of the single currency area battling runaway deficits and debt.          The financial crisis in fact has had a positive impact on the composite share index and boosted the economic growth, Hatta Rajasa. "What is important is that how to keep the balance between the capital inflows and the investment strategy. This is important," the minister said.          Therefore, the government is optimistic that the domestic economy will grow 6 percent in the second quarter of 2010. "I am optimistic it will grow 6.0 percent in the second quarter. Even many quarters have predicted our economic growth will exceed 6.0 percent in 2010, or higher than the target of 5.8-6.0 percent," Hatta Rajasa said.          He said the second-quarter growth would be helped by improved investment and export performances. "Thank God our economy grew 5.7 percent in the first quarter. Actually, our economy could grow above 6.0 percent in the first quarter. Unfortunately, our budget spending was negative. This will become a center of our attention why the budget spending does not run quickly," he said.          Darmin Nasution also shared Rajasa's optimism, saying that Indonesia's economic growth would reach 6 percent at the end of the year, though there was economic turmoil in Europe. "We hope it would be more that the targeted 5.8 percent. It is not impossible for the country to reach a growth of 6 percent," Darmin Nasution, who is also acting governor of the Indonesian central bank, said.          The Central Bureau of Statistics (BPS) reported Indonesia's year-on-year (YoY) economic growth in the first quarter of 2010 was recorded at 5.7 percent or 1.9 percent on a quarter-to-quarter (qtq) basis.          "In the first quarter of 2010 the main growth generators were the trade sector, hotels and restaurants. These sectors' YoY growth was 9.3 percent. The YoY growth of the agriculture sector was 18.1 percent," BPS Chief Rusman Heriawan said.          He said the trade sector rapidly grew in line with world economic growth which was now on a recovery track. This was also reflected in an export growth of 19.6 percent which contributed 7.7 percent to the first quarter growth.          The same thing also happened to imports which grew 22.6 percent and contributed 6.7 percent to the economic growth.          Investment in the country was neither affected by the Greek financial crisis. Chief of the Investment Coordinating Board (BKPM) Gita Wirjawan said investment in the first quarter of 2010 was showing a positive trend which was expected to continue until the end of the year.          "We have set a target of a 15 percent increase as compared to that last year,  but the upward trend in the first quarter which almost reached 25 percent indicates a good momentum for Indonesia to make bigger investment," the BKPM chief said.          He said that considering the licenses that had been issued, the investment trend would continue to increase. "I am optimistic with the figures in the first quarter. Usually investment in the first quarter is slow but this time it is an exception," he said.          Wirjawan said that in the recent "Infrastructure Summit 2010" held on April 14-17, a number of foreign companies had registered and waited for a number of projects offered by the government.          "There are nine bidder firms, among others from Japan, South Korea and China, for a 379 km railway project," he said.           Chief of the Investment Coordinating Board (BKPM) Gita Wirjawan said investment in the first quarter of this year reached Rp42.1 trillion.          "Investment in the first quarter of this year reached Rp42.1 trillion consisting of 574 projects," Wirjawan said.          He said that the foreign investment was recorded at Rp35.4 trillion or US$3.8 billion in 424 projects while domestic investment accounted for Rp6.7 trillion in 150 projects.          In the meantime, national non-oil/gas processing industries grew 4.01 percent in the first quarter of this year driven by high growth in transportation equipment, machinery, tools as well as cement and non-metal mining industries.          "I am convinced the growth in the first quarter will reach 4.01 percent. The industrial sector's growth will be relatively better in the next quarter," head of research and industrial development (BPPI) of the ministry of industries, Dedi Mulyadi, said.     (T.A014/a/H-NG/F001) (T.A014/A/A014/F001) 13-05-2010 11:38: