Economic Factors Affecting Indonesia ETF

| About: Aberdeen Indonesia (IF)
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The Indonesian stock market's benchmark index (NYSEMKT:IF) is down 60.8% since it peaked in January, and the rupiah has fallen 30% in the last month. 

James Bryson, of HB Capital Partners in Jakarta, told the Financial Times this about the ten point market support package announced by the government today: "There's nothing negative but this is not a catalyst to change the underlying problems, namely the Bakrie empire, the weakening bond market, tight liquidity and an aversion to emerging market risk."

The business empire of the family of Aburizal Bakrie, Indonesia's powerful welfare minister, is casting a shadow over the market and foreign sentiment to Indonesia. Share trading in three companies it controls have been suspended for more than three weeks while the holding company, Bakrie & Brothers, tries to sell enough assets to repay $1.2bn in loans that were guaranteed with shares when they were worth several times their current value. 

Indonesia has been urged by the OECD to overhaul its rigid labor laws, remove foreign investment and ownership restrictions and cut its fuel price subsidies. Despite a 30% increase in fuel prices in May, the Indonesian government is expected to spend one-fifth of its government budget on fuel subsidies this year.