Bandung, W Java (ANTARA News) - Bank Indonesia (BI) is of the opinion that foreign investors still see as good the countrys economic prospects despite the slow down in the past two years with an annual growth of around 5 percent.
Head of the Monetary and Economic Policy of the Central Bank Dody Budi Waluyo said in the third quarter of 2017, foreign direct investment (FDI) in the country was quite big notably in electronic trading (e-commerce)
"Indeed, FDI was very big in sector related to digital economy. But what is more important is that foreign investors still see our economy having good prospects," Dody said when explaining about the result of the Coordination Meeting between the Head Office and Regional Offices of Bank Indonesia in Bandung on Tuesday.
At a meeting in mid August, 2017, e-commerce company Tokopedia received an injection of US$1.1 billion (Rp14 trillion) from Chinas Alibaba Group.
According to Dody, if the stability is sustainable in macro economy and in exchange rate with inflation under control, foreign investment is expected to continue to flow in to drive the economic development faster.
Based on Bank Indonesia data, foreign funds flowing in to Indonesia in the first nine months of the year reached US$11 billion or around Rp146.3 trillion, lower than Rp151 trillion in the same period last year.
"Hopefully with our cutting Bank Indonesia reference interest rate, the impact would be better ahead," Dody said.
The meeting of the board of governors of the Central Bank from Sept. 20-22 decided to cut the BI 7-day Reverse Repo Rate by 25 basis point from 4.5 percent to 5.25 percent. It was the second in two success months the Central Bank cut its reference interest rate by 25 basis points after last month the rate was cut from 4.75 percent to 4.5 percent.
The cut in the BI 70-day Reserve Repo Rate was followed with 25 basis point cuts in the interest rates on Deposit Facility to 3.5 percent and on Lending Facility to 5 percent effective on Sept 25, 2017.
The Central Bank hopes that the cut in the reference interest rate would help improve bank intermediacy role and contribute to the countrys economic recovery, Dody said.(*)