Indonesia, a Strong Economy with Unique Character

CEO of Standard Chartered Indonesia, Tom Aaker
"I think no country could match these characteristics."

Vivanews - The turmoil that occurred in the stock market some time ago raised fears about the future of the global economy. Decrease AAA rating to AA + by Standard & Poors raises speculation America's ability to manage its budget.

The crisis in America's impact on global stock markets, which experienced a sharp correction. The stock market in Indonesia a few days are affected, although the current started to increase.

It is feared that Indonesia also affected as the financial crisis of 2008, although not as severe as other countries. Indonesia has many strengths such as domestic demand is quite high, and the percentage of exports to the United States that is not too large compared to neighboring countries such as Singapore.

Was this turmoil will have a major impact to Indonesia? The following interview with CEO VIVAnews.com Standard Chartered Bank Indonesia, Tom Aaker, on regarding it, Monday, August 15, 2011.

Do you think the turmoil in the U.S. will have a major impact on Indonesia?

I do not think it too had a direct impact overall. Indonesia has a strong economy, and its rank will soon go up next year. Investors will look to Indonesia. They do not care about the ranking American, but more to how the economy of Indonesia. So I think this will not affect it directly.

However, many investors are worried about the turmoil in the U.S. will spread to Europe, like France, which is feared could trigger a global crisis as happened in 2008. How do you think?

First I disagree France would collapse. French state with a AAA rating, far from it. Even if the rating is lowered, still AA. Indonesia only BB. So there's a big difference, they may rank down, but Indonesia will increase ratings. Central banks in Europe also will definitely do my best to help the troubled nation.

Is turmoil in the U.S. will have an impact on liquidity in international financial markets that will ultimately affect Indonesia?
I do not think so. Economy in Indonesia is very strong, not too dependent of other countries for exports, domestic demand is a key large primary growth.

Indonesia relying less with other countries like the United States compared to neighboring countries, like Singapore, Malaysia. Their exports to Europe and America is quite large, so if the Americans hit by the recession, will damage their exports. In Indonesia the percentage is lower, so it is still strong.

So you think Indonesia has a stronger economy?
Yes. Indonesia became one of the countries with the strongest economic growth in the world. Our predictions in 2012, economic growth (GDP) will grow 6.5 percent. This strong growth.

What do you think has great potential of Indonesia?
I think Indonesia has many young population or the age of productive human resources. Perhaps 51 percent in Indonesia consists of young people. This is a positive thing, because at 20 years from now they will enter the workforce.

They will be personally productive, and contributing to economic growth. This is very exciting for us. About 15-20 years from now, they'll have a job, have an account, buying a home, need a loan, a credit card. This is beneficial for the world of banking, including Standard Chartered Bank. Millions of people educated in Indonesia.

In other countries like Japan has a population of people with old age. They need health care, social security. While Indonesia has the productivity of workers as having a positive demographic (age).

Which country characteristics are close to Indonesia?
I think Indonesia is unique and has great economic. GDP growth is expected to reach nearly U.S. $ 1 trillion [in 2014], is enormous, coupled with a population of young, low budget deficits, government debt is not too high, I think no country could match these characteristics.

It's a good profile for a country. Probably about the same country was India, a democracy with a growing middle class is good. However, India has a problem with a high mortality rate. Indonesia does not have that problem. Indonesia has a better profile. It caught my attention.

What needs to be addressed to enhance the potential of Indonesia?
I think there are two important things that must be addressed for a growing country like Indonesia.

First, education. I think this should be a top priority, that young children in Indonesia get a good education, improve productivity.

Second, the infrastructure for this is still weak. No new toll roads, airports, seaports, power. This eliminates the chance. We see Indonesia's economy grew 6.5 percent and do not let this momentum is lost due to poor infrastructure. If Indonesia is to improve both of these countries will become larger and more successful.

Currently several countries in Asia, like China, is forecast to overheating. Whether Indonesia will experience the same thing?
Many people are talking about inflation in China. But I think inflation in Indonesia can be controlled. Our prediction of inflation around 5 percent this year, is still reasonable.

I think the central bank has many tools to curb inflation to remain low. BI has a way to reduce overheating. I think Indonesia to experience little risk of overheating.

What is Standard Chartered's strategy in Indonesia?
It's exciting for us today. Standard Chartered has been long enough in Indonesia. Lots of history. The most interesting is the current condition. For us, this means the acceleration of business, business expansion, we will continue to grow.

Last year we opened a lot of branches, employees. We want to continue to grow to a large bank. We want to continue to add customers, employees, extend credit, and increase the opportunity for Indonesia is an attractive market. We also want to increase market share.

Indonesia increased compared to the middle class in previous years. This great potential?
Of course. Young population, much in need of banking products. with the middle class continues to be greater this opportunity for us.

Currently how much market share Stanchart?
Our market share is still small which is 2 percent. Although the market share rose to 3 percent, it's a huge business. If that is achieved we are very happy, because the market in Indonesia is very large.

What business focus Stanchart?
In Indonesia we are focused on wholesale banking or corporate banking. We have two businesses are corporate banking and consumer banking as a credit card. Wholesale banking is more than 50 percent, and consumer banking is less than 50 percent.


What is your response plan related to BI that would restrict ownership of bank shares?
BI has not issued regulations formally. So far we only mendenger rumors, possible. So far we do not know. We can only say if the rules were later released, we will follow the rules.

What about the BI plans to change the status of foreign banks into limited liability company?
Once again I do not know the rules, I can not comment before the regulation.

BI reason to change the status of branches of foreign banks into PT to avoid turbulence in the event of a crisis at the headquarters. The experience of the crisis of 2008, Standard Chartered Indonesia affected large?
No, we have a minimal impact. At the 2008 crisis, Stanchart to prove we can still grow, our strong banks, illiquid. Our Focus Asia and the Middle East today. At the time of crisis, our focus to Indonesia, China, India, countries with good economic growth. Stanchart group has a strong performance.

In general, what do you think about banking regulation in Indonesia?
I think the regulation of banks today is pretty fair, and good. If you look at the financial crisis in 2008, banks in America are falling, Europe is also the same. But not in Indonesia, Indonesian banks remain strong and protected from the crisis. Bank Indonesia run the rules properly.

How did your impression of working in Indonesia?
I am very proud to be the CEO of Standard Chartered Bank Indonesia, especially we have been standing 148 years, this heritage and long history. Many people working in this bank, and I am very proud as CEO. Because we have many opportunities in the marketplace, wholesale banking and consumer banking. Because our market share is still small, we have the potential to become bigger, and we have a good foundation.


source:Vivanews

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