US 'screwed up' handling of AIIB, says Albright

Want China Times, Xinhua 2015-04-01

Madeleine Albright addresses the Senate Armed Forces Committee on
Jan. 29, 2015. (File photo/Xinhua)

The United State has "screwed up" on its way to deal with the China-proposed Asian Infrastructure Investment Bank (AIIB), former US secretary of state Madeleine Albright said on Tuesday.

One of the motives for China to initiate the AIIB was that the US Congress held up the voting share reform in the International Monetary Fund, the World Bank and other international institutions, Albright said at an event held by the Washington-based think tank the Center for Strategic and International Studies (CSIS).

As China and other countries have been questioning Washington's excessive dominance in international institutions, the US executive branch has proposed to Congress to try to adjust some of the voting share in the World Bank and IMF, in some way to ensure more equitable voting shares, but Congress has delayed to ratify such a reform. "I think there has been certain amount of frustration (from China and other countries) about that," Albright said.

According to the former secretary of state, the AIIB should not be seen as some kind of Chinese power grab, but an opportunity for the US to be able to put forward ideas on transparency and regulatory issues.

The US Treasury secretary, Jacob Lew, said recently that emerging and developed economies alike are looking to other alternatives as a means of driving the global system forward, as the international community waits for Congress to approve these reforms.

Also on Tuesday, Lew made it clear that the US stands ready to welcome the AIIB as it complements existing international financial institutions and upholds high standards.

The AIIB, expected to be formally established by the end of 2015, will be an international financial institution to fund infrastructure projects in Asia. China confirmed on Tuesday that 30 countries have been approved as prospective founding members of the bank.

US President Barack Obama, left, poses with Chinese President Xi Jinping as

 he arrives for the Asia-Pacific Economic Cooperation leaders meeting at Yanqi

Lake, north of Beijing on Nov. 11, 2014. (AFP Photo/Greg Baker)

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"The Timing of the Great Shift" – Mar 21, 2009 (Kryon channelled by Lee Carroll) - (Text version)

“… Here is another one. A change in what Human nature will allow for government. "Careful, Kryon, don't talk about politics. You'll get in trouble." I won't get in trouble. I'm going to tell you to watch for leadership that cares about you. "You mean politics is going to change?" It already has. It's beginning. Watch for it. You're going to see a total phase-out of old energy dictatorships eventually. The potential is that you're going to see that before 2013. They're going to fall over, you know, because the energy of the population will not sustain an old energy leader. Remember where you heard it... in a strange, esoteric meeting with a guy in a chair pretending to channel. [Kryon being factious... Kryon humor] Then when you hear it, you'll know better, won't you? "Maybe there was something really there," you'll say. "Maybe it was real," you'll say. Perhaps you can skip all the drama of the years to come and consider that now? [Kryon humor again]

These leaders are going to fall over. You'll have a slow developing leadership coming to you all over the earth where there is a new energy of caring about the public. "That's just too much to ask for in politics, Kryon." Watch for it. That's just the beginning of this last phase. So many things are coming. The next one is related to this, for a country in survival with sickness cannot sustain a leadership of high consciousness. There is just too much opportunity for power and greed. But when a continent is healed, everything changes. .."

".. Many years ago, the prevailing thought was that nobody should consider China as a viable player on the economic stage. They were backward, filled with a system that would never be westernized, and had no wish to become joined with the rest of the world's economic systems. Look what has happened in only 30 years. Now, look at Africa differently …”

Li Keqiang reaffirms AIIB cooperative stance

Want China Times, Xinhua 2015-03-25

Li Keqiang, right, meets Takehiko Nakao in Beijing, March 23. (Photo/CNS)

The Chinese premier, Li Keqiang, on Monday reaffirmed cooperation between the Asian Infrastructure Investment Bank (AIIB) and existing financial institutions.

The AIIB will take an open and inclusive attitude and be complementary to existing development banks, said Li at a meeting with the president of the Asian Development Bank (ADB) Takehiko Nakao .

The AIIB will strengthen the region's communication, social and economic development, Li said.

Nakao said the ADB was ready to cooperate with the AIIB.

Speaking of the support of the ADB for China's social and economic development, poverty reduction and regional economic cooperation, the premier pledged further partnership with ADB and called on it to play a bigger role in poverty reduction and development.

Britain, France, Germany, Italy, Luxembourg and Switzerland recently applied to join the AIIB as founding members, which already had 27 prospective founding members.

Nakao is in Beijing for the annual meeting of the China Development Forum, a platform for business and academic leaders to interact with China's top decision makers and economic planners.

This year's meeting has attracted more than a hundred CEOs from international corporations, experts and scholar, and leaders of international organizations.

Sri Mulyani Indrawati, managing director at the World Bank. 

(File photo/Xinhua)

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World Bank welcomes AIIB initiative: managing director

Want China Times, Xinhua 2015-03-23

Sri Mulyani Indrawati, managing director at the World Bank. (File photo/Xinhua)

The World Bank welcomes the Asian Infrastructure Investment Bank (AIIB) and will closely cooperate with the China-proposed institution, the institution's managing director Sri Mulyani Indrawati said Sunday.

"Any new initiative that will mobilize funding in order to fill infrastructure gap is certainly welcome. World Bank really welcomes the AIIB initiative," Indrawati told Xinhua in an exclusive interview.

She dismissed worries that the AIIB will compete against World Bank or existing regional development banks, saying that the global need of infrastructure is huge and the market is large enough. "What's important is whether you are going to be able to match the funding with the need of infrastructure," said Indrawati.

"We will definitely open for cooperation with AIIB. Even now, we are working very closely in the beginning and looking at the setting, principle and framework of this institution," she said.

Indrawati said the World Bank will work to support and make sure that AIIB can live up to the expectation of many countries in the world who really want to see infrastructure to develop in a better and sustainable way.

"By working with us, it's going to show and prove that they (AIIB) are adopting the same principle like other international institutions, for example, like the World Bank," said Indrawati.

The AIIB aims to become an international financial institution providing support to infrastructure projects in Asia, and is expected to be established by the end of this year.

The bank has had 27 prospective founding members. Britain, France, Germany, Italy, Luxembourg and Switzerland have applied to join the AIIB as a founding member.

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With NDB established, Beijing turns to new bank for Asia

Want China Times, Kao Hsing and Staff Reporter 2014-07-18

A sign for the APEC 2014 second senior officials' meeting in Qingdao,
Shandong province, May 14. (File photo/CNS)

After the establishment of the New Development Bank (NDB) operated by the BRICS states on July 16, China is proposing to set up the Asian Infrastructure Investment Bank (AIIB) as another part of Beijing's bid to break the dominance of the United States and Japan-led international financial institutions.

The NDB, an alternative to the World Bank and the International Monetary Fund, is run by Brazil, Russia, India, China and South Africa.

China's next move is to launch the AIIB, which is considered a rival to the World Bank and the Japan-led Asian Development Bank.

The AIIB concept was proposed by President Xi Jinping at last year's Asia-Pacific Economic Cooperation (APEC) summit and its goal is to raise funds for infrastructure construction in Asia. In addition, the AIIB will invest in railways, road and airport construction that connects Central Asia, Middle East and Europe.

China has invited participation from 22 countries in the Middle East and Central and South Asia, as well as member states of the Association of Southeast Asian Nations (ASEAN).

Premier Li Keqiang championed the AIIB idea when meeting the prime minister of Kuwait in June. Xi also brought up the AIIB issue several times during his recent meeting with President Park Geun-hye of South Korea, and they are understood to have reached a certain consensus.

At the annual BRICS summit this year, to attract India's participation in the AIIB, Xi invited India's new prime minister, Narendra Modi, to attend the APEC summit set to be held in Beijing in November, the first time for India to attend the annual event having declined participation over the last decade.

China also hopes the invitation will prompt India to back the establishment of the AIIB as well as quell discontent in India at the NDB being headquartered in Shanghai.

Beijing plans to complete the memorandum of understanding for the structure and establishment of the AIIB by the end of this year and officially launch it during the first half of next year. It also plans to join the Eurasian Development Bank soon after.

Chinese President Xi Jinping (4-L, first row) poses with leaders of the

 CELAC group of Latin American and Caribbean states, in Brasilia, on July 17,

 2014 (AFP Photo/Nelson Almeida)

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BRICS create development bank, based in Shanghai

BRICS create development bank, based in Shanghai

Yahoo – AFP, 15 July 2014

The BRICS group of emerging powers launched a $50 billion development bank Tuesday to be based in Shanghai and a $100 billion crisis contingency fund, according to a joint declaration.

The New Development Bank's first president will be from India while the board's chairman will be Brazilian, according to the declaration released at a summit in Fortaleza, Brazil.

The bank will have an initial subscribed capital of $50 billion followed by an authorized capital of $100 billion, equally shared among Brazil, Russia, China, India and South Africa.

The Contingency Reserve Arrangement will have an initial size of $100 billion and will help countries avoid "short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements."

The bank and fund are seen as counterweights to the Western-dominated World Bank and International Monetary Fund, which BRICS nations say need more reform to give emerging nations more voting rights.

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Asian Development Bank set to appoint first Chinese chief economist

Asian Development Bank set to appoint first Chinese chief economist

Want China Times, Staff Reporter 2014-05-25

Dr Shang-Jin Wei attends the "New Openness in China" forum held
at Beijing's Tsinghua University, Oct. 17, 2012. (Photo/CFP)

For the first time in its 48-year history, the Asian Development Bank (ADB) will invite a Chinese national to serve as its chief economist, reports the Shanghai-based China Business Daily, citing bank sources on May 23.

Dr Shang-Jin Wei, a professor of finance and economics at Columbia University in the US, may soon be appointed as chief economist of ADB, while serving concurrently as director of its Economics and Research Department. ADB has yet to announce the appointment as of press time, however.

Wei has been a shining star among Chinese economists. He has held the position of professor at Columbia's Graduate School of Business since 2007 and is also director for the National Bureau of Economic Research's (NBER's) Working Group on the Chinese Economy. His main academic research has focused on such fields as international finance, international trade, government's governance and reform, the Chinese economy and macroeconomics.

According to rankings of a total 31,000 global economists issued in 2012 by IDEAS, a RePEc (Research Papers in Economics) service hosted by the Research Division of the Federal Reserve Bank of St Louis, Wei ranked in 152nd place, the best ranking among Chinese economists.

When Justin Yifu Lin wound up his four-year service as chief economist of the World Bank in June 2012, Wei was one of the hottest candidates for the post. Some in the economics circle even commented that as far as academic achievements and age are concerned, Wei will most likely become the first Chinese national to win the Nobel Prize for Economics.

In a recent e-mail to Shanghai's National Business Daily in response to questioning on the rumors, Wei said, "As ADB has yet to announce the appointment, I have no comment on it." But he acknowledged to the paper that if the appointment becomes a reality, he will be first native Chinese to serve as ADB's chief economist in its history.

ADB's current chief economist, Changyong Rhee, is from South Korea, while his predecessor, Dr Jong-Wha Lee, was also South Korean. The bank's current deputy chief economist Zhuang Juzhong is Chinese, however.

After graduating from Fudan University in Shanghai in 1986, Wei received his masters in economics from the University of Pennsylvania in 1988, and receive a masters in business administration (finance) and a PhD in economics from University of California, Berkeley in 1991 and 1992, respectively.

Wei's outstanding performance in the economics field has mainly resulted from his dedicated research efforts, China Business Daily said. Wei's most prominent research paper in China is a NBER working paper titled "Tracing Value-added and Double Counting in Gross Exports."

The research paper found that China contributes a value-added of only US$6 to the entire global supply chain of Apple's smartphones for each iphone assembled in the mainland, but the whole export value of US$358 for each iphone exported from China is calculated into the nation's gross exports. It marked the first time for a Chinese economist to use the value-added accounting method to figure out how China's gross exports are seriously bloated.

Indonesia Extends Currency Swap Agreement With China

Jakarta Globe, October 3, 2013

Indonesia’s central bank extended a 100 billion yuan ($15 billion) bilateral currency swap arrangement with People’s Bank of China on Tuesday in an attempt to bolster market confidence in Southeast Asia’s economy.

Bank Indonesia goveror Agus Martowardojo hopes the swap would boost trade and direct investment between Indonesia and China, as well as bolster short-term liquidity to stabilize financial markets.

“The agreement reflects regional commitment in the face of global uncertainty and will contribute propitiously towards maintaining macroeconomic and domestic financial stability,” Agus said in a statement released on Wednesday.

In 2009, Indonesia and China agreed on a three-year 100-billion yuan currency swap to help ease foreign-exchange shortages. Agus said the extension of the swap agreement would build market confidence in Indonesia economic fundamentals.

Bank Indonesia has raised its benchmark interest rate by a total of 1.5 percentage points to 7.25 percent since June, in part to arrest rupiah decline and to keep inflation in check.

Such tighter monetary policy, however, comes with its own downside as it curbs consumer spending in Indonesia, the Asian Development Bank said on Wednesday.

The ADB also released its updated Asian Development Outlook 2013 report on Wednesday, recasting growth estimates below 6 percent for 2013. The Indonesian economy is now expected to grow 5.7 percent in 2013, less than the previous estimate of 6 percent. It is also projected to expand 6 percent in 2014, down from 6.6 percent growth previously, the report read.

First-half growth at 5.9 percent came amid a drop in fixed investment, slowing consumption and increased inflationary pressures following fuel subsidy cuts, ADB reported.

“Policies taken to address inflation and the current account deficit will restrain growth in the near term,” Edimon Ginting, ADB’s deputy country director for Indonesia, said in a statement. “The economy will be [expanding] slower than anticipated.”

Indonesia, once a darling of foreign investors, has been exposed to its external vulnerabilities as its has to cope with deficit in current account while as hot money exited the country in search of safe havens, due to the US Federal Reserve’s expected tapering of quantitative easing measures. The rupiah fell to its lowest rate against the dollar in four-and-a-half years.

The Central Statistics Agency (BPS) reported a trade surplus for August, the first in five months, despite a decline in exports by value. A 10 percent decrease in fuel imports helped shrink the trade gap, but imports across the board — from heavy machinery to automobiles — dropped in August. Inflation slowed to 8.4 percent in September, from 8.8 percent a month earlier, BPS reported.

Inflationary pressures will likely impact consumer spending through the end of 2013, ADB reported. In 2014 spending is expected to rise again as inflation subsides and political parties embark on an election-time spending spree, the bank said.

Renminbi coins and banknote. (Photo/CFP)

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"The U in Kundalini"- Oct 18, 2012 (Kryon channeled by Lee Carroll) - (Subjects: Kundalini, Unification, EU, Nobel Peace Prize 2012, Middle East, South America, Only 5 Currencies on Earth, Old Souls, Duality will dismiss, 3D Humanity will melt with Multi dimensional higher self, Global Unity… etc.)

WB clamps down on Vietnamese, Indonesian firms

The Jakarta Post, Viet Nam News, The Asia News Network, Thu, 12/15/2011

The World Bank announced on Tuesday its debarment of three companies and one individual for punishable practices under WB-financed water supply projects in Vietnam and Indonesia.

The companies include Vietnamese Social and Environmental Development JSC (SECO), Australian Kellogg Brown&Root Pty Ltd (KBR Pty) and Indonesian PT Amythas Experts and Associates. The World Bank also debarred Nguyen Xuan Doan, Managing Director of SECO, who was found to be involved in the same sector in Vietnam.

"This settlement shows the Bank’s work on integrity is resilient while we support companies to clean up their operations and therefore enforcing international compliance standards," said Leonard McCarthy, integrity vice president at the World Bank.

According to allegations, SECO engaged in a scheme to defraud World Bank clients and has been declared ineligible to participate in Bank Group-financed projects for the next five years.

KBR Pty, an Australian subsidiary of KBR Inc, was debarred for a period of two years with conditional release following an investigation by the Bank’s Integrity Vice Presidency (INT) into violations of the Consultant’s Guidelines under a local Bank-financed water supply project. KBR Pty misrepresented the availability of key consultants during contract negotiation and execution, which resulted in the company being awarded the contract and delays in execution.

Following the terms of the agreement KBR Inc will also implement remedial measures to its corporate compliance program to comply with the World Bank Compliance standards.

The World Bank also debarred Indonesian PT Amythas Experts and Associates for a period of three years for fraudulent practices in relation to a World Bank-financed community development and poverty alleviation project.

"We have to act with ever more vigilance when it comes to rooting out fraud and corruption," said McCarthy.

Amythas Experts will be required to implement a corporate compliance program in line with World Bank standards and meet other conditions as part of the settlement under the debarment that became effective on December 7. The period of debarment could be shortened if the company meets additional conditions of restitution and disclosure.

The three companies cannot be awarded a contract, or otherwise participate in new activities under World Bank Group-financed or executed projects during the debarment period.

They are eligible for cross debarment under the April 2010 Agreement for Mutual Enforcement of Debarment Decisions entered into by the African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development, the World Bank Group and the Inter-American Development Bank Group.

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Indonesian Economy Performing Well: ADB

Jakarta Globe, September 14, 2011

The Asian Development Bank on Wednesday upped Indonesia’s forecast
for economic growth from its April outlook while inflation forecasts were
 trimmed for 2011 and 2012. (AP Photo/File) 

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Hong Kong. The Asian Development Bank is trimming its forecast for economic growth in developing Asian countries because of worries about weak demand from key trading partners including the US and Europe.

The ADB said on Wednesday that it is lowering its 2011 growth forecast slightly to 7.5 percent from 7.8 percent previously for 45 Asian countries.

The bank is also cutting its 2012 forecast to 7.5 percent from 7.7 percent.

The Manila-based lender said the slowdown in demand from the United States and Europe “continues to cast a cloud over the region,” with export growth easing off in the second quarter.

Inflation also remains a “threat,” with consumer price inflation predicted to average 5.8 percent this year before cooling off to 4.6 percent in 2012.

Indonesia’s forecast for economic growth was upped from ADB’s April outlook while inflation forecasts were trimmed for 2011 and 2012.

The economic growth rate increased to 6.5 percent in the first half of the year due to “stronger investment, private consumption and robust exports.”

Inflation decreased from 7 percent in January 2011 to 4.8 percent in August.

Growing employment in Indonesia contributed to a 4.5 percent rise in private consumption. The unemployment rate fell to 6.8 percent from 7.4 percent from a year earlier. However, job creation, especially for workers between 15 and 24, is still a challenge.

“About 18 percent of the young people who had joined the workforce by August 2010 were unemployed, or six times as high as the rest of the workforce,” the report said.

Despite the growing number of imports, net exports expanded. It is forecast that 15 percent of the government’s total expenditure will be spent on subsidies for electricity and fuel.

Indonesia saw its best performance in five years with manufacturing output expanding by 5.6 percent with textiles, iron and steel leading the increase. While foreign direct investment inflows were the highest in 10 years at $10 billion.

The report concluded that, “Taking these factors into consideration, the forecasts for GDP growth are raised slightly from April to 6.6 percent this year, and to 6.8 percent for 2012 based on the improving outlook for investment next year.”

AP, JG

PNG's Nationwide Microbank Signs Up 100,000th Customer

Asian Development Bank, 31 May 2011

MANILA, PHILIPPINES - Papua New Guinea's (PNG) Nationwide Microbank has signed up its 100,000th customer, highlighting the ongoing demand for quality and accessible banking services in the country.

The landmark bank account was opened by Tommie Seriate, a 49-year-old widow and mother of four from the Unggai Bena District of the Eastern Highlands Province.

"I am so happy and glad that I made the right decision to open an account with Nationwide Microbank," said Ms Seriate. "They made it so simple to open a savings account."

To make a living, Ms Seriate operates a small coffee garden in a remote part of the Eastern Highlands Province, some two hours by road north of Goroka, the provincial capital. She had previously tried to open a bank account with two commercial banks without success.

Nationwide Microbank (formerly Wau Microbank) was established in 2004 as a pilot scheme under the ADB Microfinance and Employment Project. The project was implemented between 2002 and 2010 with a $9.6 million concessional loan from ADB to the Government of PNG and a grant from the Australian Agency for International Development (AusAID). It laid the foundation of a growing microfinance sector in PNG, through extensive training of staff and the development of appropriate products.

"Giving individuals and small firms access to the finance and banking services they need encourages entrepreneurship which ultimately helps boost economic growth for the country as a whole," said Eugenue Zhukov, Regional Director of ADB's office in Australia.

Although no official data exists, ADB estimates that only 15% of the PNG population has access to formal or informal banking facilities, lower still in rural parts of the country. This means that small firms are unable to get the finance they need to expand and individuals are unable to either borrow to meet their financial needs or securely save their earnings.

"Nationwide Microbank continues its efforts to ensure that the people of Papua New Guinea have access to relevant and affordable financial services," said Tony Westaway, Nationwide Microbank's Managing Director. "We are ‘banking the un-banked', an achievement that would not have been possible without the ongoing support from the Asian Development Bank and the Pacific Financial Inclusion Programme (PFIP)."

In order to further expand its reach into rural areas and make its services even more accessible to clients, Nationwide Microbank is developing a "branchless" banking strategy, with support from PFIP and ADB, which will offer financial services through the use of mobile phones and other wireless technology. The aim is to enable clients to use their bank accounts without needing to travel to a bank branch, a journey that can be both costly and time-consuming from remote parts of the country.

PFIP is a Pacific-wide program that is helping to provide sustainable financial services to low income households. It is funded by the UN Capital Development Fund, AusAID, the European Union, and the United Nations Development Programme (UNDP). PFIP operates from the UNDP Pacific Centre in Fiji.

About ADB

Yudhoyono Opens International Corruption Conference

Jakarta Globe, May 10, 2011

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Fighting corruption is not just a moral imperative but also a democratic, political, social, and economic obligation, President Susilo Bambang Yudhoyono says.

Yudhoyono made the statement in his opening address at the International Conference on Foreign Bribery in Business Transactions 2011 in Bali on Tuesday.

Present in the conference were Corruption Eradication Commission (KPK) officials and representatives of law enforcement and corruption eradication from the G-20, OECD, APEC and Asian Development Bank, as well as national and foreign observers.

“This gathering is truly a corrupter's worst nightmare! Thank you for taking part in this very important conference, to talk about combating bribery in international business transactions,” Yudhoyono said, adding that fighting graft had been a cornerstone of his administration.

Commenting on bribery cases, the president said the money spent on bribes meant the money was not used to improve roads, schools and hospitals.

“By turning a blind eye to a bribe here and a bribe there, we are compromising the quality of life for ourselves, our parents, our children. We all pay the price. Ultimately, bribery robs all of us of true progress and economic growth,” Yudhoyono said.

He said that even today, systemic corruption continued, and in developing countries, it did so by taking advantage of the global financial network.

The corrupt exploit the international financial network, covering their tracks in foreign jurisdictions, he said, adding that as long as these “safe havens” existed, people would continue to siphon money and send it overseas, he said.

“We cannot keep on supporting this endemic problem,” the president said, adding that the World Bank estimated that bribery accounted for some 3 per cent of the world’s economy, or more than $1 trillion dollars.

He said bribery was prevalent in tax evasion efforts, and it was also rife in the investment sector, particularly foreign investment.

But Yudhoyono said law enforcement agencies were not keeping idle for some 150 companies and individuals, in more than 10 countries have been charged with bribery and duly punished.

“Today, some 250 cases remain under investigation. Yet, these efforts have not been enough.”

Antara

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World Bank, ADB Support Indonesia's Economic Corridor Scheme

Jakarta Globe, April 09, 2011

Indonesian President Susilo Bambang Yudhoyono and World Bank managing
director Sri Mulyani Indrawati, right, walking after having a meeting in Jimbaran,
Bali on Friday. This is the first time former Indonesian finance minister
Sri Mulyani Indrawati has met the Indonesian President as the managing
director of the World Bank. (JG Photo/J.P. Christo)

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Jimbaran, Bali. The World Bank and Asian Development Bank (ADB) have voiced support for Indonesia’s plans to accelerate economic expansion.

Coordinating Minister for Economic Affairs Hatta Rajasa said on Saturday that ADB president Harihuko Kuroda and World Bank managing director Sri Mulyani — until last year Indonesia's top finance minister — had delivered their support at a meeting with President Susilo Bambang Yudhoyono.

“They will support the master plan to speed up infrastructure development and connectivity as the main pillar in the economic acceleration and integration of regional sector in six corridors,” Hatta Rajasa said.

According to government plans, six regions will be designated as main economic corridors. Sumatra will be developed as an agricultural and national energy center, while Kalimantan will focus on mining and energy, Sulawesi-North Maluku on agriculture and fisheries, Bali-Nusa Tenggara on tourism and supporting national food self-sufficiency, Papua-Maluku on natural and human resources, and Java on industry and services.

Hatta on Saturday said that the ADB intended to give direct assistance to both state and private enterprises to develop added value for Indonesian economic acceleration and expansion.

“Thus connectivity, capacity building, and human resources are the three main pillars the Asian Development Bank is interested in,” Hatta said, adding that he had been asked by President Susilo Bambang Yudhoyono to talk with the World Bank and ADB to follow up with the support.

The economic minister explained that based on ADB and World Bank evaluations, Indonesia’s economic situation at present was good, although it faces three problems — namely rising food price rises, oil prices and general inflation.

Antara, JG

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Barclays Capital upbeat on Indonesian economy

Vincent Lingga, The Jakarta Post, Jakarta | Fri, 04/30/2010 10:53 AM

Barclays Capital is upbeat on Indonesia’s economy, predicting growth of 6.5 percent this year driven mainly by robust household spending on the back of healthy consumer confidence and an improving employment outlook.

The prognosis by the investment banking arm of Barclays Bank PLC, the second largest bank in Britain, is even more bullish than the government’s estimate of 5.8 percent, the International Monetary Fund’s 6 percent, the Asian Development Bank’s 5.5 percent and the World Bank’s 5.6 percent.

“Domestic consumption will continue to be the main driver of growth, while the purchasing power will get a boost from the 10 percent pay rise for civil servants, bullish sentiment in the stock market, credit growth and rising commodity prices,” Barclays Capital regional economist Prakriti Sofat said.

She told The Jakarta Post on Thursday that she didn’t see any big risk of a sudden reversal in portfolio capital inflows, which had been increasing sharply over the past year because the high interest rate differential was only one of the positive factors wooing fund inflows.

“Many investors also look into the medium- and long-term prospects of the economy, which are positive,” she added.

Sofat also observed positive development in the employment sector as the informal economic sector had been doing well as a shock-absorber of the labor surplus.

She did not see any risks of instability arising from the increasingly antagonistic relations between the government and the parliament.

“The political noise will only be a short-term distraction because the politicians will eventually come to their senses and take into account public interests,” she said.

The UK investment bank observed that with strong growth, benign inflation and supportive balance of payments outlook, Bank Indonesia would most likely maintain the benchmark interest rate at 6.5 percent in the first half but with a slight tightening in the third quarter, ending the year with the rate at 7.25 percent.

With a robust balance of payments ending the year with a surplus of around US$14 billion (2 percent of gross domestic product) and a continued rise in financial flows offsetting the reduction in the current account surplus as well as a strong recovery in both foreign and domestic investments, the rupiah rate is forecast to range between Rp 8,800 and Rp 9,000 for the year.

Barclays Capital’s commodity analyst Yingxi Yu saw a substantial contribution from the commodity sector to invigorating domestic consumption, citing strong income support from the rise in coal, palm oil and tin prices.

Sofat added that fundamentally, Indonesia’s economy was quite different from a decade ago as the national balance sheet becoming increasingly sound.

“Indonesia’s balance of payments condition is strong with large foreign exchange reserves [of $80 billion], the government debt to GDP ratio has declined steadily [to less than 30 percent] and the corporate balance sheet is also strong with low leverage,” she said.