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Indonesian Equities Continue to Break Records as Indonesia still become the best place for Bond Buyers

From Tempo Interactive : http://www.tempointeractive.com/hg/nasional/2010/12/10/brk,20101210-298054,uk.html

Jakarta’s economy improved in 2010. The economy was still impacted by the 2008 and 2009 global crises. But conditions had improved in 2010 and they are predicted to improve even further next year
“There was infrastructure improvement, such as in the transportationsector, and a stable distribution of raw material products,” said Agus Suherman, head of the Jakarta Central Statistic Agency (BPS), on Wednesday.

Based on BPS data, from January to September the economy rose by 6.48 percent. Meanwhile, in 2008 Jakarta’s economy grew 6.18 percent and in 2009 it grew only 5.01 due to the global crisis.
BPS recorded that in 2010, prices were stable even though there were staple increases in the price of staple food.. “Even though there were many rallies, terrorism and bombing issues, Jakarta’s economy in 2010 was relatively stable,” said Agus.

To maintain growth in 2011, BPS noted several factors to be taken into account, such as a distribution process free of traffic jams and flooding, maintaining the stability in the price of rice and other food commodities and improving the manufacturing industry. “Jakarta must also try to keep the inflation rate at a moderate pace, not to big and not to small,” said Agus. 

From January to September this year, Jakarta’s GDP was Rp 220.5 trillion. The biggest contributor amounting to Rp 61.6 trillion, was the tertiary sector, such as the credit sector and services. Trade, hotels and restaurants came second place, contributing Rp 45,80 trillion, followed by the transportation and communication sectors contributing Rp 22.45 trillion.. 

and this one from about Inflation Rate in 2011: http://www.embassyofindonesia.org/news/2010/12/news041.htm

Finance Minister Agus Martowardojo said the government will cautiously maintain the inflation next year. He promised to pay attention to the potential high inflation pressure points, especially early next year, when the policy restricting subsidized fuel consumption comes into effect. 

"We must keep the inflation rate because the challenges are big. We will be careful in 2011," Agus told reporters at the House of Representatives (DPR) building in Jakarta yesterday. 

Agus also said the 2010 inflation target is likely to slip by six percent. The cumulative inflation until November, he said, only left 0,02 percent room from the set target. 

The Central Bureau of Statistics (BPS) earlier stated that the pressure on the inflation rate at the end of the year was still high because of the Christmas and New Year celebrations. In addition, the recovery process after the disasters in Wasior, Mentawai and Yogyakarta will add to pressures on the inflation rate. 

BPS Chief Rusman Heriawan also predicted the fuel restriction will increase inflation by 0.3 percent, assuming the restriction will be effective as per January 1, 2011 for all private vehicles. 

Tony Prasetiantono, the Economic and Policy Study Center Chief from Gadjah Mada University, estimates that the Bank Indonesia rate will increase by 25 basic points in the first quarter of 2011. According to Tony, the increase is the monetary authority's response to the inflation pressure. 

Perry Warjiyo, the Economic Research and Monetary Policy Director at Bank Indonesia, said the central bank did not need to increase its rate yet because the 4.31 percent inflation rate is considered safe. 

The central bank did not respond to the increase of volatile food or administrative prices, but studied the macro impacts against the inflation. Since August 2009, Bank Indonesia has maintained its lending rate at the 6.5 percent level. 

Tony thinks the high inflation rate can affect loan extensions. Debtors will be hesitant to cash their credit. This year, uncased credits are estimated to amount Rp500 trillion. Banks, Tony said, will lose the potential for profits.