Latest 2009 Lay Off Prediction

(BelajarEkonomi.Com)Enterprise Owner Association (Apindo) has recently revised their prediction of total lay offs in Indonesian industries. As mentioned before by it's chairman,lay offs are a must and very difficult to avoid.

Actually there are choices for company owners to deal with the crises:
1. A Salary Cut
2. Homing employees, which means only receiving basic salary and no presence and transport pay, and ..
3. The hardest choice which is Total Lay Off.
At a recent press conference, the Apindo chairman, Sofyan Wanandi said the figures would reach 1 - 1,5 million lay offs which would peak at the mid of 2009.This is above the ILO prediction of 650,000 (six hundred and fifty thousand) .
To support his statement, joined with him in the press conference was Chairman of the Textile Association, Chief of the Association of Shoemakers, Head of Food and Beverages Association, and the Motorcycle industry Association's chief.
The unemployment rate would rise 9 percent caused by this world economic crisis.
(Source : PR)

Indonesian Banking Sector Update

(BelajarEkonomi.Com)
The Indonesian banking sector seems to have some growth in the credit sector eventhough the crisis proceeds. The Central Bank's governor said that there has been a lowering of the liquidity because of some policy adopted.
Yearly credit growth are 37.1 percent.Investment credit grew at a record figure of 42,9 percent, Working Capital credit went 39 percent.While consumption credit grew 33 percent.
The Non Performing Loan(NPL) or known in Indonesia as 'kredit macet' figure is at a stabil rate of 3.9 percent. The Banking sectors CAR (Capital Adequicy Ratio) is still as high as 16 percent.
From the central bank's point of view, credit and market risk is currently in a safe level, but could worsen along with the crisis.
Projected economic growth for next year of 4.9 to 5 percent would grow the credit rate from 15 to 20 percent says the governor.
( Microblogged by Tresna.Source : KCM)
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Fwd: The Fed Lowered Rates , Stock Market Confident

(BelajarEkonomi.Com) As a good sign for the world market.The effect of one percent decrease of the Fed Rate already gave confidence to the Indonesian Stock Exchange.
The index strenghten 21,15 points to 1.363,98. The LQ rose 1,91 percent to 274,31(Kompas 18 dec 08)
These increases are due to the confident market which predicts that the lowering of the Fed Rate would stimulate the US economy real sector which further would hopefully increase world products demand.
It is also a good sign that the US government is taking the appropriate actions.

Obama on Economic Recovery

Congratulations. The US of America has voted and they have voted for Barrack Obama. US citizens have great hopes on him. And so does much people around the world is also expecting so much from him. This is also for us in Asia especially in Indonesia. What would be his steps to tackle this crisis? From his campaign it is quiet clear what he will do.

Let's just make this simple. Roosevelt at his time had plans for the US to recover from the Great Depression. His plans while campaigning were also interesting and got the minds of voters. Obama is in some sort of the same situation now.

But the thing is .. Can Obama pull it off this time? What Roosevelt did was he created projects such as building the great Roosevelt Dam to absorb the unemployment because he thinks the enemy of an economic crisis is unemployment. This fiscal expansion policy is to regain the economic growth and is also known as a Keynesian economic approach.

Now what Obama wants to do is cut tax for the low income, increase them for the middle and rich. He also said he wants to create jobs by giving incentives to entrepreneurs. This is to increase the people's demand of goods and service which can move the economy. Regulate the financial market, and take the troops from Iraq which will significantly lower the cost of war.

The current conditions when the US market has low demand of goods from exporting countries like China and Indonesia. And when they (US) stop demanding, what it means to us is lay offs and factories forced to close because of no order. And as we speak is happening now in Indonesia. HR departments and company owners are in a state of worry because they are faced with the cost of termination and other possible legal actions by workers. A local West Java newspaper also quoted that a total 70.000 lay offs are about the happen in the beginning of 2009, starting now.

That's why recently the Indonesian government is finding ways so that these industries have the ability to survive a crisis by depending on the local market.

Can we call this an effect of globalization?

There is much hope that the US economy will recover again, and in Obama hands it the faith of the US Economy which we hope will also effect the world's economy.

Economic Growth Rate at the Start of 2008 Not as Expected

The Indonesian economic condition recently has not been in a good shape because of external and internal factors. The government is working hard in revising the state budget, because there aren�t many options.

As targeted at the beginning of the year, the rate of development seems to be at the lower level for the target between 6,2 � 6,8 % . Meanwhile the inflation rate at the beginning of 2008 has risen to the rate around 6 � 6,5% from the earlier target of 4 � 6 %.

Last January the inflation rate has reached a level of 1.77% and Year to Year reached 7,36%.Quite a high figure regarding that the target is around 4-6%.

These figures have risen because the macroeconomic indicators have worsened due to external conditions such as the sub prime mortgage crisis in the US. The central bank�s revised prediction of the US�s economic growth from 1.9 % to 1.5% shows the pessimism.

While the latest World Economic Growth was also corrected from 4.4% predicted to 4.1 %. This slowing of the world�s growth gives effects to the export rate and the nation�s economic growth.

The rise of the world�s oil prices has also increase the allocation for subsidies in Indonesia and burden the national budget. This increase allocation for local subsidies has also decreased the fiscal role of the budget which is for consumption and investment of the government aiming to create economic stimulus.

Even so the national reserve is still predicted to exceed the USD 70 billion. Currently (February 2008) the national reserve is USD 55 billion. This makes the rupiah in a stable level of Rp 9300 against the green bag.

The central bank�s rate around 7.5 to 8% is set so the real sector moves better. Currently housing loan rate (KPR) is in a ideal level around 9 -10%. But requirements are tighter then before.

The workforce tally each year for the late 5 years are 2,5 million new workforces while the economy only absorbs 180 thousand workforce for each 1 % of economic growth.The ideal figure is 400 thousand workforce absorption each percent of growth.

Pursuing the Economic Outlook of O-Eight

The 2008 economic outlook has been predicted by many analysts. There are optimism and also pessimism. Only time will later prove it.

The economic growth is expected to be 6,5 % due to developments outside of Java. The government�s target is 6,8 %. Development in Java Island is perceived to be in a stagnant phase already.

The world�s crude oil price could again reach sky high in 2008 (towards USD 100/barrel) therefore the government will have to increase subsidies or find other solutions to this problem. Currently, they are socializing this scheme to shift from lower octane fuel to a higher one along with the increasing price. But it is not popular to the people.

The program of shifting from kerosene to LPG is still not as the government plan yet. In many rural areas in Indonesian cities we see people queuing for kerosene for their daily cooking needs, while LPG is not well spread according to plan.

As the effect of this price increase, it would trigger inflation rate to a figure 6,8% above 4- 6 % target of the government. This means that the Central Bank Rate (BI Rate) wouldn�t get any lower than the current 8% figure. Even so, the government has a more optimistic figure of 7,5%.

The US sub prime mortgages issue is still haunting the global economy cause it will determined whether the US will step into an economic recession phase. This year (2007) alone, many investors shift their portfolio investments to high grade economy countries (Asian Markets) to gain more profit because of higher yield.

Because of the above conditions, analyst predicts that the stock market could reach an index of 3000 � 3600 as a bullish condition. Any movements of the Fed Rate has direct impact to Asian markets proven by 2007�s September decrease from 5,25% to 4,25%.

But this December after proven that that lowering did not do much to the US economy, the world markets seems to now have immunity to such policy.

The scenario that we would not want to see is the US economic recession impacts China (China�s reserves most are in USD), then later impacts the Asian markets including Indonesia.

Currently Indonesians are relying on CPO, mining goods, and the portfolio investment markets. But prices could get bad in international trading because of bargaining conditions.

The RI economic team has great responsibility to the sustainability and stability of the Indonesian economy.

Redaksi

BelajarEkonomi.Com