The Induesian Jakarta Stock Exchange and the Indonesian ETF (IF) has been unusually strong over the past year due in part to cleaning up its balance sheet. An Economist article points out that the World Bank thinks that 2007 could be a year of great opportunity for Indonesia if it only takes advantage of its improved finances and get moving on economy-boosting public works. It takes a similar view of the Philippines, South-East Asia’s other giant democracy.
Indonesia’s public debt has fallen below 40% of GDP, cutting interest obligations. The country recently declared “independence” from the International Monetary Fund, having paid off the last of its loans. The Jakarta stockmarket and the rupiah have been strong, reflecting foreign investors’ renewed interest. This week, as the government was preparing to issue up to $2 billion in bonds, it got a boost from Moody’s, a credit-rating agency, which said it was considering an upgrade. President Susilo Bambang Yudhoyono is fond enough of drawing up grand plans for public works. But politics keeps them on the drawing board.