In Critical Issues Seminar held at the Park Hotel 1 December, it conveyed exposure on critical issues related to the implementation of the accelerated program (quick wins) in the phases of the program strategic direction DGI Bureaucratic Reform. Based on Act No. 17 of 2007 on the National Long Term Development Plan 2005-2025, Vision Indonesia national development is an independent, advanced, just, and prosperous that can be achieved either by development of the state apparatus through Reforms to improve the professionalism of the state apparatus and to realize good governance, both at central and local levels in order to be able to support the successful development in other fields. In addition, according to Presidential Decree No. 5 of 2010 concerning RPJMN 2010-2014, Indonesia Vision 2014 is “The Prosperous Indonesia, Democratic, and Justice”. This vision is realized through 5 national development agenda 2010-2014, among which are: Economic Development and Improvement of Welfare Improvement of Local Governance, Enforcement Pillar of Democracy, Law Enforcement And Anti-Corruption, Development All Inclusive And Justice. The regulation also mentioned that the Bureaucratic Reform and Governance Improvement Government became the first priority of the 11 national priority of United Indonesia Cabinet II. From both a legal basis, it can be seen the urgency of the implementation of the Reforms to the development of the state apparatus into a better direction, so as to formulate strategy and direction of development policy nasional.Apa actually meaning Bureaucratic Reform? Bureaucracy Reform is a major change in paradigm and governance of Indonesia and the big gamble for the Indonesian people in facing the challenges of the 21st century because if successful, the abuse of public authority can diminimalisair and eventually can be eliminated, other than that Indonesia could have the most-improved bureaucracy, quality of service to the community and the quality of the formulation and implementation of policies / programs the agency may be increased, and the Indonesian bureaucracy that anticipatory, proactive, and effective can be realized. But if it fails, Bureaucratic Reform will only lead to the inability of the bureaucracy in the face of complexity that moves exponentially in the 21st century, resentment, trauma, loss of public trust in government, and the threat of failure to achieve good governance (good governance), and even hamper the success of development national. Bureaucracy Reform is also associated with thousands of processes overlap (overlapping) antarfungsi-governmental functions, involving millions of employees, and spend the budget is not small. It is also an effort to rearrange the bureaucratic process from the highest to the lowest level and made a breakthrough with gradual steps, concrete, realistic, really, to think out of the ordinary / routine that is, paradigm shift, and with extraordinary effort. And efforts to revise and establish various regulations, modernize the policies and practices of central and local government management, and adjusting the functions of government agencies with the task paradigm and new roles.
Global Credit Research – 01 Dec 2010
Singapore, – Moody’s Investors Service has placed on review for upgrade the Indonesian government’s Ba2 foreign and local-currency bond ratings.
The main reasons for the decision are:
(1) Indonesia’s economic resilience is accompanied by sustained macroeconomic balance;
(2) The government’s debt position and the central bank’s foreign currency reserve adequacy are improving; and
(3) the economic policy framework remains increasingly well positioned to deal with evolving macroeconomic challenges and potential shocks.
The rating review also applies to Indonesia’s Ba1 country ceiling for foreign currency (FC) bonds and Ba3 ceiling for FC bank deposits. The country ceiling for short-term FC debt is “Not Prime” and remains unaffected by this action.
These ceilings act as a cap on ratings that can be assigned to the foreign currency obligations of other entities domiciled in the country.
RATIONALE FOR THE REVIEW FOR POSSIBLE UPGRADE:
Moody’s had placed Indonesia’s Ba2 sovereign ratings on positive outlook in June 2010, after a one-notch upgrade in September 2009, on account of the country’s resilience to the global financial crisis, improving government credit-metrics, and its ability to manage domestic political challenges to the reform agenda without damaging key policy institutions’ credibility or effectiveness.
“We have now placed the sovereign credit ratings and country ceilings on ‘Review for Possible Upgrade’ as the economic recovery is being sustained alongside well managed external accounts and reasonably good inflation fundamentals,” said Mr. Aninda Mitra, a Vice-President at Moody’s and its lead sovereign analyst for Indonesia.
“Moreover, the recent improvement in Bank Indonesia’s foreign currency reserve position coupled with continuing reduction in the government’s debt burden are reducing risk perceptions and encouraging greater inflows of foreign direct investment and long-term capital,” he added.
“Additionally, amidst growing inflows of foreign portfolio investment, monetary stability alongside ongoing policy flexibility are enabling Indonesian authorities’ to gradually deepen money markets and heighten financial absorption capabilities,” says Mr. Mitra.
RISKS TO THE RATING AND ECONOMIC OUTLOOK
Moody’s considers key risks to the rating outlook to be embedded in the country’s political system.
Opposition from coalition partners have slowed the government’s drive to institute economic reforms, however, this has not yet impacted overall policy management capabilities or near-term economic prospects.
Indonesia’s banking sector prudential ratios are well positioned. However, if bank supervision is constrained by political interference or poor governance, the risk of a shock to the real economy or to the government’s contingent liabilities could rise.
CREDIT TRIGGERS FOR A POSSIBLE UPGRADE:
These would include assessments during the review of whether:
(1) market deepening prospects and the ongoing development of the domestic institutional investor base will continue to lend more stability to the government’s onshore debt “finance-ability”;
(2) ongoing monetary management will continue to anchor medium-term inflation expectations as well as investor confidence amidst lingering global financial market uncertainty –derived from, but not limited to, quantitative easing in the U.S. and Japan, banking and sovereign debt problems in the Eurozone; and
(3) the durability of the greatly strengthened balance of payments and external payments position.
PREVIOUS RATING ACTION & METHODOLOGY
Moody’s last rating action on Indonesia was on June 21, 2010 at which time the outlook on the Ba2 sovereign rating was shifted to positive, from stable.
The principal methodology used in rating the government of the Republic of Indonesia is “Moody’s Sovereign Bond Methodology”, published in September 2008, which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody’s website.
http://www.bi.go.id/web/en/Publikasi/Investor+Relation+Unit/Highlight+News/Sovereign+Rating.htm
Singapore
Aninda S. Mitra
Vice President – Senior Analyst
Sovereign Risk Group
Moody’s Investors Service Singapore Pte. Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Singapore
Thomas J. Byrne
Senior Vice President – Regional Credit Officer
Sovereign Risk Group
Moody’s Investors Service Singapore Pte. Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
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Nani Afrida, The Jakarta Post,
Jakarta -The Indonesian Chamber of Commerce and Industry (KADIN) and five European business chambers launched the 2-day EU-Indonesia Business Dialogue in Jakarta on Monday to boost trade and investment.
Indonesia and the EU were strategic partners that shared complementary economic interests, Coordinating Minister for the Economy Hatta Rajasa said on Monday.
Senior EU trade relations official Rupert Schlegelmilch said that the EU was Indonesia’s second largest export partner.
“The EU is also a [foreign direct investment] source for Indonesia with around 50 billion euro ($US66.19 billion) and over 700 European companies in the country,” he said.
Leaders of Indonesia companies will meet high-level representatives from European companies to discuss strategic business during the conference.
