Semarang, C Java (ANTARA News) - The Indonesian economy is expected to face increasingly bigger challenges as the ASEAN Economic Community (AEC) comes into effect in January 2016, a central bank official said.

"When the AEC takes effect, Indonesia must be able to compete with other ASEAN member states," Chief of Bank Indonesia (BI) Representative Office for Central Java and Yogyakarta Iskandar Simorangkir said here on Friday.

Indonesia must compete with other ASEAN member states, not only in its domestic market but ASEAN market as well. In the domestic market, Indonesia must be ready to face the entry of goods from other ASEAN member countries, he said.

"We will face not only the entry of foreign industries but also foreign human resources," he said.

Indonesia should not remain just an onlooker when the AEC is implemented, he said.

One of the key factors that will enable Indonesia to compete with other ASEAN member states was to contain the inflation rate, he said.

"The inflation rate depends on the domestic economy. Currently, inflation is still being influenced by economic slowdown since early 2015," he said.

Although the economy began improving in the fourth quarter, the impact of economic slowdown in the previous quarters is still being felt, he said.

He predicted that the inflation rate for all of 2015 will stay at 3 percent. The inflation rate in December is being estimated at 0.3-0.4 percent.

"Hopefully, the inflation rate could be kept in check, so it will have a good impact on the industries competitive edge and the publics purchasing power," he said.(*)

Editor: Heru Purwanto
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