While Singaporeans (government and people and MSM) are looking to China and India as drivers for growth, we may be ignoring the new Brazil on our doorstep.
Obama’s trip to Indonesia scheduled this weekend (and now delayed until June because he needs to twist arms over the healthcare bill) was being hailed by the governments of Indonesia and the US ” as a momentous opportunity to cement their relationship on security, trade and military issues”. More to the point, Indonesia is South East Asia’s largest economy and growing (it was one of the few countries including China and Brazil that had +ve growth in 2009): meaning American firms want to come in.
So keen are the Americans and others to do business that the Indonesia’s political situation are glossed out, or given an optimistic spin.
“The Indonesian parliament voted to pursue a criminal investigation of the vice-president and finance minister, both pro-market reformists, in connection with a bank bail-out in November 2008. Given that the campaign to investigate was led by tycoon Aburizal Bakrie – whose group was denied a government bail-out weeks earlier – …. the kind of stuff used to send investors scurrying back to core holdings, ” FT reported sometime back.
“Political unrest, after all, might threaten President Susilo Bambang Yudhoyono’s programme of fiscal and institutional reforms, lengthening the odds on a Brazil-style scenario of stronger currency, more moderate inflation and booming consumption that would lift the country to investment-grade status. But the results of the vote did not weigh one bit on asset prices on Thursday.”
Equity portfolio inflows have been as strong as that of any other emerging economy. “The rupiah is the eighth best-performing of 26 emerging market currencies this year, having ranked fourth last year,” FT reported.
Looks like investors have faith in the long term prospects of Indonesia and will take things like demonstrations, corruption, and bomb blasts in their stride.
“The country now has many of the hallmarks of stability that mature markets lack: strong real growth, a relatively contained and modest budget deficit, increasing foreign direct investment and rising foreign exchange reserves. “
Let’s hope so. After all Indonesia, like Argentina and Brazil, until recently, have been always countries of the future. But it never happened because of bad government. Indonesia could still turn out to be another Argentina. And note that I was a bull on Indonesia. A bull that in the 1998 crisis, had his balls crushed.
And let’s hope S’pore can manage its ties with this prickly neighbour to our mutual advantage. But I’m not a “S’pore is always wrong” S’porean, blaming everything on our government. The Indonesian army has form in bullying its people and invading neighbours: Aceh, Sulawesi, East Timor, West Papua, Malaysia. Remember the Indonesian army planted bombs here in the 1960s?
But then remember the golden age for S’pore was in the late 70s, and 80s when Indonesia was booming under MM’s mate, Suharto. Whatever one may think of both men, they were pragmatists to the mutual advantage of both countries, minor problems notwithstanding.
BTW, the coming week’s posts will have a regional theme.