AntaraJakarta (ANTARA) - Bank Indonesia (BI) believes that the flow of foreign capital into the Indonesian financial market will be even stronger after the Presidential Election on April 17, 2019, as political uncertainty over the direction of Indonesia's economic policy would end.
"Hopefully, after the General Election, political uncertainty will end. So, the funds entering Indonesia will be even higher, and we will monitor them continuously," said BI Senior Deputy Governor Mirza Adityaswara, after the inauguration of the construction of the Financial Services Authority's new building in Jakarta, Tuesday.
With regard to external economic factors, Mirza said the situation is gradually improving, thus encouraging the inflow of foreign capital. The improved situation was due to the softening of the direction of the US Federal Reserve's monetary policy and an assurance over US and China trade dispute negotiations.
On the domestic front, there is hope that the current account deficit will improve in the first quarter of 2019 compared to the fourth quarter of 2018, which was 3.5 percent of the Gross Domestic Product.
In addition, he expects the flow of foreign capital in the first quarter and the second quarter of 2019 to increase as a result of an increase in investor confidence, which the elections are expected to bring.
"The first quarter of this year saw foreign capital entering, continuing from the fourth quarter of 2018. Hopefully, after the election, it will increase further," Mirza said.
Recalling the economic conditions during the presidential election five years ago, in 2014, Mirza said that Indonesia was lucky as the economic condition was good during that time. In 2014, the total foreign capital which entered reached US$26 billion. This amount represents the average foreign capital entering the Indonesian financial market each year.
Stating that Indonesia still needs a lot of foreign capital to finance the current account deficit, Mirza said this was because the export performance had not improved, and the import performance continued to increase. Indonesia needed a constant flow of foreign capital to maintain economic stability.
"The current account deficit can be funded by ensuring adequate foreign investment (PMA) comes in. Usually, the one-year PMA from the balance of payments is 15-18 billion dollars. If continued foreign capital enters, it can go up to 20-26 billion dollars per year," he said.
The presidential election will take place on April 17, 2019, along with the election of legislators.
Translator: Eliswan Azly
Editor: Suharto
Copyright © ANTARA 2019
