UOB Indonesia optimistic on Indonesia’s growth for next year

Jakarta, October 23, 2012  – PT Bank UOB Indonesia today predicted that Indonesia’s economy will continue to grow 6.3 per cent next year as a result of higher incoming investments to the country while domestic consumption is expected to remain firm.

Indonesia stands out for its economic resilience during a period of protracted global economic uncertainty and has become an attractive destination for investors. Its strong macroeconomic fundamentals, growing base of middle-class consumers and the rise of intra-regional trade provide opportunities for businesses to grow. UOB Indonesia also sees tremendous potential from infrastructure development projects in Indonesia.

Jimmy Koh, Head of Research and Investor Relations, UOB Group, in which UOB Indonesia is one of its subsidiaries, welcomed ‘the rise of Indonesia’ over the past few years, but he reminded businesspeople to stay updated on the challenges in the global environment due to the linkages among trade, businesses and the financial system.

“Businesses need to keep abreast of the market situation as the debt crisis in the Eurozone continues to be a concern and could still change quickly,” Koh said during a presentation to 500 Indonesian business leaders gathered for UOB Indonesia’s Economic Outlook 2013 titled “Finding truth behind the myths of the Southeast Asian Tiger: The prolonged global crisis and its impact on Indonesia and the region.”

“Quantitative Easing (QEs) in the developed economies has led to liquidity flowing into this part of the world, leading to concerns of overheating and asset price inflation. Many parallels have been drawn between the current crisis and the 1997 Asian financial crisis. However, as a company that not only navigated through the Asian financial crisis but also helped our customers do well, our assessment is that the Indonesia economy is on a much stronger footing than it was in 1997. Indonesia’s foreign reserves today stand at more than $100 billion, as compared with less than $20 billion at the end of 1997. Therefore, they are very different dynamics as compared to 1997,” President Director of PT Bank UOB Indonesia Armand B. Arief said opportunities are often hidden in a crisis.

“Learning from more than five decades of experience in Indonesia, we take the approach of maintaining strong business discipline, diligence and prudence as we manage our operations.

“Where needed, we re-balance our portfolio and strengthen our funding in order to stay true to the fundamentals of banking which are all about having a strong balance sheet. With that, we can support the growth of our customers through market cycles.

“This experience-sharing session provides customers with practical information they can use to help them make decisions on new business opportunities. Armed with the right information they will be better able to see the crisis in a new light and apply the same discipline, diligence and prudence we have used to build their businesses.”

Looking ahead to 2013, UOB Indonesia believes that Indonesia’s growth will remain robust in the coming quarters. UOB Indonesia is forecasting Indonesia’s economic growth to strengthen to 6.3 per cent in 2013, barring major shocks from the West. This growth is likely to be boosted by domestic factors such as higher income and investment demand as well as some recovery in global demand next year.

UOB Indonesia also forecasts that the benchmark policy interest rate is likely to be kept at a record low of 5.75 per cent until the end of 2013. Meanwhile, inflation is estimated to rebound to 5.1 per cent next year, from an estimated 4.5 this year. In 2011, Indonesia recorded a 5.4 inflation rate.

Minister of Trade Gita Wirjawan was the keynote speaker and guest of honor at UOB Indonesia’s Economic Outlook seminar. He was joined by economist Faisal Basri who also spoke during the event.