There were three important things delivered by the Chief of Capital Investment Coordinating Board (BKPM), Gita Wiryawan, at the public lecture entitled "The Role of Investment in Development" held at the University Club on Friday afternoon (1/10). In relation to the investments climate and expectations in 2010, he talked about the past, present, and future. "In this public lecture, I just want to talk about the past, present, and future. Regarding the past, we could retreat in times of Sriwijaya or Majapahit. But we don’t need to go that far, just year 1998, because this year is an important point of the transformation of political and economic sides," he said.
According to Gita, during 1998-2001, the economic side showed very worrying economic indicators. This was reflected by the inflation, interest rates, and exchange rates. "I remember exactly when the exchange rate in Jakarta in 1998 changed from Rp2000 to Rp17,000. Inflation rose to 60-70% and interest rate 60-70%. It is a remarkable phenomenon, whatever theory from whomever and wherever, the reality was different. We’ve experienced tremendous political transformation alongside democratization," he explained.
In the presence of students and professors, Gita Wiryawan said the political process in 2004 and 2009 could be accounted for, and so can the ongoing economic process. Economically, the fiscal aspect showed the creation of extraordinary fiscal room. It can be realized thanks to the discipline and prudent support from the previous and current government.
"Our policy settings have been very clear with the fact that the ratio of debt to the economy has fallen dramatically to 27% compared to the same ratio in other countries in Asia. In Malaysia, it is almost 54%, while in European countries, such as Italy, Greece, Portugal, and Spain, the ratio of debt to the economy is almost entirely above 100%. It shows the unhealthy economy in each country, the lower the ratio, the healthier," he said.
In terms of fiscal deficit, according to Gita, it is very controlled by the rate below 2%, even in the year of 2010 it is expected to reach the level of 1.6% or 1.7%. "That level is very good," he added. While in the monetary side, the use of financial instruments, namely interest rates to control inflation, are remarkable when implemented effectively and efficiently. Our interest rate is still at 6.5%. The government is expected to be able to maintain and control the current inflation despite the price increase that has happened four times. Especially in the previous month of Ramadan, the price of rice, sugar and other commodity prices tended to rise but we managed to control them with market operations. "So, we can conclude that in terms of macroeconomic, the economy is quite good, both in terms of fiscal and monetary policies. Similarly from the political side, of course we’ve seen the democratization happening. There is domestic and the international recognition that there is no more centrifugal power that could break the existing stability," Gita Wiryawan said.
In another part of his lecture, Gita explained the improved stability and investment climate as well as economy and politics have made good ratings on Indonesia. Rating agencies, such as Standard and Poor, rated Indonesia in the level of double-B (BB+) in the year 2010. Similarly, Fitch gave the same rating as Moody’s (BB2). "What do AA and BB+ mean? Those mean one level below BBB. The triple B will be an enormous impact on our economy," he concluded.
Meanwhile, Vice Rector of Alumni Affairs and Business Development, Prof. Ir. Atyanto Dharoko, M. Phil., Ph.D., welcomed this public lecture. With this guest lecture, he hoped the students and faculty get new insights about the development of Indonesia and the world related to economic problems. "Especially the latest conditions in Indonesia and the world related to capital, we certainly need to have more insights on those sorts of things," he said.