Indonesia ‘Well-Placed to Withstand Economic Shocks’

SINGAPORE ~ Indonesia is better placed to withstand external shocks to its economy 10 years after the Asian financial crisis, the country’s trade minister has said.

“One of the main vulnerabilities of the Asian crisis was the financial system and the crisis of course took a huge toll on our financial system,” Mari Pangestu told reporters here at the weekend.

“But since then, I think we have been able to rebuild the financial system and have the necessary laws and regulations to ensure a sound banking system and non-banking system.

“Now it’s for us just to ensure that the supervision of the central bank is in place and implemented and there a number of regulations actually already in place and continuing to be improved.”

Pangestu added that Indonesia now had a stable macroeconomic system and exchange-rate movements involving the rupiah currency had stabilized.

“In terms of the financial system and exposure to short-term flows, it’s very manageable. Short-term flows as well as foreign-debt exposure are at a very low level right now,” she said.

The minister was speaking to reporters after a forum to encourage foreign investment in economic zones in Indonesia’s Riau islands near Singapore.

Indonesia was among the nations hardest hit by the financial crisis that devastated East Asian economies in 1997.

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