Country report INDONESIA Country Risk

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Country report INDONESIA Country Risk Powered By Docstoc
					                    Country report

Indonesia managed to steer through the global recession well, largely because the export sector is
relatively small. Economic growth slowed to 4.5% in 2009 and is expected to return to the five-
year average of around 6% in 2010/11. Additional government spending had relative little effect as
local authorities failed to spend the additional allocated budget. Countercyclical policy therefore
leans heavily on monetary policy. The central bank walks a tight rope between controlling inflation,
stimulating economic growth, stemming the inflow of short-term foreign capital and the
appreciation of the rupiah. Hot money inflows are a risk factor for Indonesia, as historically the
country has been sensitive to changes in investor sentiment. The liquidity position has improved on
the back of higher foreign exchange reserves and lower external debt, but the external financing
needs are still substantial. On the political side, the ongoing struggle between President
Yudhoyono, who promised to reform, and vested interests, which yield considerable power, hinder
reforms. Major issues which need to be addressed are well-known and complex, such as poverty,
poor infrastructure, corruption, unemployment, deforestation and interreligious tensions.

Things to watch:
•   Inflow of hot money
•   Reform drive to improve business environment
•   Progress on complex issues such as poverty, corruption and environmental issues

Author:                 Reintje Maasdam
                        Country Risk Research
                        Economic Research Department
                        Rabobank Nederland

Contact details:        P.O.Box 17100, 3500 HG Utrecht, The Netherlands

November 2010                    Rabobank     Economic Research Department           Page: 1/8
Country report INDONESIA

National facts                                                       Social and governance indicators              rank / total
  Type of government                   Republic                        Human Development Index (rank)                111 / 182
  C apital                             Jakarta                         Ease of doing business (rank)                 122 / 183
  Surface area (thousand sq km)        1,905                           Economic freedom index (rank)                 114 / 179
  Population (millions)                237.5                           C orruption perceptions index (rank)          111 / 180
  Main languages                       Bahasa Indonesia, English,      Press freedom index (rank)                    117 / 178
                                       Dutch, local dialects.          Gini index (income distribution)                37.6
  Main religions                       Muslim (86%)                    Population below $1 per day (PPP)                7%
                                       Protestant (6%)
                                       Roman C atholic (3%)          Foreign trade                                     2009
  Head of State (president)            Susilo Bambang Yudhoyono      Main export partners (%)        Main import partners (%)
  Head of Government                   Susilo Bambang Yudhoyono        Japan                17         Singapore        30
  Monetary unit                        Indonesian rupiah (IDR)         Singapore            11         C hina           15
                                                                       US                   11         Japan            11
Economy                                                   2009         C hina                  7       Malaysia          7
Economic size                            bn USD      % world total   Main export products (%)
  Nominal GDP                              540            0.94         Mineral products                                 17
  Nominal GDP at PPP                       962            1.37         Fats, oils & waxes                               10
  Export value of goods and services       133            0.85         Liquefied natural gas                             8
  IMF quotum (in mln SDR)                 2079            0.96         C rude petroleum & products                       7
Economic structure                        2009         5-year av.    Main import products (%)
  Real GDP growth                          4.5             5.7         Intermediate goods                               72
  Agriculture (% of GDP)                    15             14          C apital goods                                   21
  Industry (% of GDP)                       48             47          C onsumer goods                                   7
  Services (% of GDP)                       37             40
Standards of living                        USD        % world av.    Openness of the economy
  Nominal GDP per head                    2249             25          Export value of G&S (% of GDP)                   25
  Nominal GDP per head at PPP             4006             36          Import value of G&S (% of GDP)                   21
  Real GDP per head                       1479             19          Inward FDI (% of GDP)                            0.9

Source: EIU, CIA World Factbook, UN, Heritage Foundation, Transparency International, Reporters Without
Borders, World Bank.

Economic structure and growth
With an average income per capita of USD 2249, Indonesia is classified as a middle income country
by the World Bank. The country has 238 million inhabitants, making Indonesia the fourth most
populous state in the world and home to the largest Muslim population. The economic structure of
Indonesia is dominated by the agricultural sector and the mining sector. The agricultural sector
accounts for a mere 15% of GDP, but employs almost half of the workforce. While the mining
sector (included in “industry” in chart 1) is a labor-scarce sector, occupying only 1% of the
Indonesians, it contributes significantly to GDP as well as exports. Indonesia was a member of
OPEC until January 2009, but net oil exports had become too small. The country is still resource-
rich and extracts gas and small amounts of tin, nickel, bauxite, copper, silver and gold. Other
sectors that are important are the palm oil industry (Indonesia is the world’s largest exporter), the
manufacturing sector (textiles, electronics, machinery & equipment), tourism and logging.
The economy of Indonesia was less affected by the global recession than many other emerging
markets, as exports account for a relatively small part of GDP. Growth averaged close to 6% in the
five years before the global financial crisis and slowed slightly to 4.5% in 2009. The economy is
expected to accelerate again to almost 6% this year and slightly above 6% in 2011. Heavy rains
during the dry-season (April-October) put negative pressure on the mining and agricultural sectors
this year, but rice production, Indonesia’s staple food, is not affected. Nevertheless, the food
inflation rose during the summer (see also section on economic policy below). Private consumption
is the main driver of the growth acceleration, backed by increasing wages and decreasing
unemployment. The export sector benefits from strong demand from China this year, but this is

November 2010                              Rabobank        Economic Research Department                    Page: 2/8
Country report INDONESIA

expected to slow next year. As import demand is growing alongside the economy, the net
contribution of the external sector is expected to be small. The downside risks to the expectations
are linked to the performance of the global economy.

Chart 1: Economic structure                                                      Chart 2: Growth performance
60    % of total                                                 % of GDP
                                                                            60          % change p.a.                           % change p.a.
     employment                                                                   10                                                             10

50                                                                          50    8                                                              8

40                                                                          40    6                                                              6

                                                                                  4                                                              4
30                                                                          30
                                                                                  2                                                              2
20                                                                          20
                                                                                  0                                                              0
10                                                                          10    -2                                                             -2
                                                                                          05        06      07    08   09    10e       11f
 0                                                                          0
          Agriculture               Industry                Services                     Inventory changes             Private consumption
                                                                                         Gross fixed investment        Government consumption
                   Employment (l)      Contribution to GDP (r)                           External demand               Overall economic growth

Source: EIU                                                                      Source: EIU

The financial sector in Indonesia consists of a wide variety of organizations, ranging from large
commercial and foreign-owned banks to local, rural banks and Islamic banks. In general, the
financial sector weathered the global financial storm well. Banks in Indonesia tend to use whole-
sale funding on a limited basis and economic growth slowed only slightly. Despite this, loan quality
was under pressure during 2009. It stabilized in the first half of 2010. In several sectors, mainly
export-oriented SMEs and corporates, the ratio of non-performing loans (NPL) and special-
mentioned loans (SML) increased. NPLs in the portfolio on consumer loans remained constant
during the financial crisis, on the back of a rather stable unemployment rate and declining inflation
and interest rates. End 2009, the NPL ratio stood at 3.8% and SMLs were high at 5.7% of loans.
Credit growth slowed substantially in the second half of 2008 and in 2009, but rebounded towards
end 2009. For 2010, credit growth is estimated to be around 20%. This strong credit growth is
expected to put pressure on the capitalization.

Political and social situation
Key to Indonesia’s future are reforms in the social and political field. Especially, since the current
structural issues have the risk of aggravating the impact of an unexpected (but unfortunately not
improbable) shock, such as a terrorist attack, large scale tsunami or sudden change in investor
sentiment. Admittedly, significant steps in the right direction have been made in the past years,
but more action is needed. The overall business environment would improve much if bureaucracy
and red tape, poor infrastructure, cumbersome legal system, corruption and state intervention are
addressed. Long-term economic growth is constrained by these factors, while the young and
growing workforce is in need of job creation above the current level. Unequal access to and poor
quality of education is also hindering the unemployment issue. Besides higher economic growth,
more inclusive economic growth is needed to reduce poverty. About 29% of the population lives on
less than USD 1.25 per day (in PPP terms), according to the World Bank, and a report of the World
Food Program (WFP) states that 6% of the population is undernourished. Other areas that require
reforms and attention from the government are the democratization process, human rights,
freedom of speech and press and environmental issues (deforestation). Corruption in the forestry
sector is said to be a major issue. Finally, the security threat of terrorist groups, interreligious
tension and separatist forces (e.g. on Papua) and the threat of natural disasters, which are a given
in Indonesia, continuously call for attention from the authorities.
In the presidential elections of 2009, President Yudhoyono was reelected with a comfortable 60%
of the votes on promises to continue his social and political reform drive. Although he made great

November 2010                                                      Rabobank            Economic Research Department                                   Page: 3/8
Country report INDONESIA

strides in his first term, the more recent slowdown in reforms is affecting Yudhoyono’s popularity.
His Democratic Party (PD) became the largest party in the House of Representatives (the
parliament, DPR) in the 2009 elections, but it lacks a majority. As a result, Yudhoyono has built a
six-party coalition, which holds two-thirds of the seats. Within the six-party coalition there are
large differences on the necessity, speed and shape of reforms and vested interests are said to
have a strong say in the political playing field. For example, Ms. Mulyani (former minister of finance
and strong supporter of reforms) went head to head with Mr. Bakrie (chairman of coalition party
Golkar and a wealthy, anti-reform businessman) when Ms. Mulyani refused to change stock market
rules during the financial crisis to support the companies owned by Mr. Bakrie and his family. In
the end, in an apparent attempt to keep peace in the coalition, president Yudhoyono did not
support Ms. Mulyani, which is said to be reason for her resignation (although this was clearly not
communicated as the reason), and Mr. Bakrie was appointed the managing chairman of the
coalition. Although the resignation of Ms. Mulyani has reduced the infighting in the coalition, the
whole incident has raised question marks on the president’s dedication to reforms (not to speak of
nepotism, corruption, governance, etc).
Traditionally, most power in Indonesia has been concentrated in the presidential office. Several
reforms have increased the influence of parliament in recent years, but the president still has a
pivotal role. The next presidential and parliamentary elections are expected in 2014, in which
president Yudhoyono cannot be reelected.
Internationally, Indonesia is increasingly claiming its role. Next year, the country will chair the
ASEAN (Association of Southeast Asian Nations). The US have indicated that it sees Indonesia as a
bridge towards the Muslim world, as well as the country which could play a role in the balancing act
between the US and China. If played well, Indonesia’s influence could benefit from this.

Economic policy
The Bank of Indonesia (BI, the central bank) needs to walk a fine line between controlling inflation
-their official purpose- while steering the economy, guarding the value of the rupiah and preventing
an overflow of foreign capital. As fiscal policy has limited impact on the cyclical swings in the
economy, the monetary channel is important for implementing countercyclical policy.
Inflation in 2009 (4.8%) hit a nine-year low on the back of lower oil and food prices. For 2010,
despite upward pressure on food prices as a result of heavy rains in the dry season, inflation
pressure is expected to be modest (leading to an inflation of around 5%), which is largely due to
the appreciating trend of the Indonesian rupiah. As inflation is expected to breach the 4-6% target
by the end of 2010, the BI is expected to raise interest rates in late 2010 or early 2011. The
reserve requirements have already gone up recently.

Chart 3: Inflation                                                               Chart 4: Indonesian rupiah
30   % change p.a.                                         % change p.a.    30            06   07        08   09      10     11
                                                                                  7,000                                           7,000
25                                                                          25
                                                                                  8,000                                           8,000
20                                                                          20    9,000                                           9,000
                                                                                 10,000                                           10,000
15                                                                          15
                                                                                 11,000                                           11,000
10                                                                          10   12,000                                           12,000
                                                                                 13,000                                           13,000
 5                                                                          5    14,000                                           14,000

 0                                                                          0
                                                                                 15,000                                           15,000
       05            06    07     08        09           10e        11f          16,000                                           16,000
-5                                                                          -5   17,000                                           17,000
         Consumer prices (CPI)   Producer prices (PPI)         Target CPI
                                                                                               IDR/USD             IDR/EUR

Source: EIU                                                                      Source: Ecowin

November 2010                                                   Rabobank           Economic Research Department                            Page: 4/8
Country report INDONESIA

The BI will however be cautious to raise its policy rates to prevent too much upward pressure on
the rupiah (IDR). After dropping end-2008, the currency has recovered on the back of a strong
inflow of foreign capital. Although this will limit the imported inflation, it will also hurt the
competitiveness of the export sector. Even more important, the government fears that carry trade
could create assets price bubbles. In June, the government introduced capital controls, aimed at
slowing short-term foreign investment. At the same time, new rules were introduced to deepen the
financial markets and create a secondary market for government bonds. Hopefully, a deeper
financial market will help to stem the volatility of the rupiah, which is traditionally sensitive to
changes in investor sentiment. More capital controls, like the ones introduced in June 2010, are not
expected, as the government still wants to attract long-term foreign investment. If the country
would become rated investment grade by the large rating agencies, the inflow of capital is likely to
increase substantially, thereby increasing the risk of asset bubbles.

Chart 5: Fiscal balance and public debt                               Chart 6: Subsidies
       % of GDP                                      % of GDP         1200                                                             1200
  40                                                             4
                                                                      1000                                                             1000
  30                                                             3
                                                                       800                                                             800
  20                                                             2
                                                                       600                                                             600
  10                                                             1
                                                                       400                                                             400
  0                                                              0

                                                                       200                                                             200
 -10                                                             -1

                                                                         0                                                             0
 -20                                                             -2
                                                                             2008          2009       2010 (budget)   2010 (revised)
        05        06       07   08    09       10e         11f
                                                                             Other expenditure (IDR trl)     Subsidies (IDR trl)
             Public debt (l)         Budget balance (r )

Source: EIU                                                           Source: EIU

During the global recession, the government had allocated additional budget to counter the drop in
economic growth. Although government spending increased somewhat – leading to a fiscal deficit
of 1.6% of GDP in 2009 compared to 0.6% of GDP in 2008 – many local authorities were unable to
fully use the allocated budgets. In 2010, the fiscal balance of Indonesia is expected to have a
modest deficit of around 1.5% of GDP. This is narrower than planned (official target is 2.1% of
GDP), as government authorities again failed to reach their spending targets. Government
expenditure did rise in 2010 on the back of higher fuel subsidies, which follow global oil prices. For
2011, the official budget target is of 1.7% of GDP, but a slightly more modest budget deficit is
Subsidies (mostly on fuel and energy) take up a substantial part of the government budget. This
year, subsidies are expected to account for almost 20% of the central government expenditures
and future costs are difficult to assess as these strongly depend on international oil prices.
Although in many cases the beneficiaries are better-positioned home and car owners or companies,
lowering subsidies remains a sensitive topic. In July, subsidised electricity prices were raised by an
average of 10%. Although the government had planned to substantially restrict the distribution of
subsidized fuel as of 1 September 2010, these plans have been postponed – officially due to
technical problems.
In line with relatively small fiscal deficits and strong economic growth, Indonesia’s public-debt-to-
GDP ratio continues to fall. It dropped from 35% of GDP in 2005 to 27% of GDP in 2009 and is
expected to be around 25% in 2010/11. If Indonesia is upgraded to investment grade by the major
rating agencies, fund raising is likely to become cheaper. Currently about two thirds of the central
government budget deficit is financed domestically and a third by foreign financing.

November 2010                                              Rabobank      Economic Research Department                                         Page: 5/8
Country report INDONESIA

Balance of Payments
Although the economy did not suffer too much from the global recession, the export sector was hit.
The economies of Indonesia’s main export partners, the US, Japan and Singapore, went into
recession due to the global crisis. Moreover, the value of Indonesia’s key export products
(minerals, LNG, oil products and food products) fell. This led to a drop in the export of goods and
services of 9.7% in 2009. This year, the export is expected to grow by 8% again, with a large role
for demand from China, the runner-up in the list of main export partners. The import side of
Indonesia’s current account balance is dominated by intermediate goods and to lesser extent
capital goods. Due to a combination of lower export demand (and therefore less demand for the
import of intermediate goods), a contraction of domestic demand and lower commodity prices,
imports dropped 15% in 2009. For 2010, a growth of the import bill of 13% is expected, supported
by the strong rupiah. Therefore, the trade surplus is expected to decrease from 6.5% of GDP in
2009 to a little over 5% of GDP in 2010. This trend is expected continue, which would lead to a
trade balance surplus of 5% of GDP in 2011.
As the trade balance is the main determinant of the current account, the current account balance
follows the trend of the trade balance. During 2009, the current account surplus increased to 2% of
GDP, but this is expected decrease to a small surplus around 1.5% of GDP in 2010 (or USD
10.5bn). In 2011, a slightly higher surplus of 1.7% of GDP is expected on the current account. The
income and services balances tend to be in moderate deficit. The deficit on the income balance is
the result of interest payments on loans and profit repatriation from foreign-owned companies

Chart 7: Current account balance                                              Chart 8: Investment flows
      % of GDP                                               % of GDP         12   USD bn                                       USD bn   12
10                                                                      10

 5                                                                      5      8                                                         8

 0                                                                      0
                                                                               4                                                         4

 -5                                                                     -5
                                                                               0                                                         0
                                                                                     05     06   07        08        09   10e   11f
-10                                                                     -10
          05       06        07      08      09      10e     11f
                                                                              -4                                                         -4
       Transfers    Income        Services   Trade     Current account
                                                                                                      Net FDI   Net PI

Source: EIU                                                                   Source: EIU

Not only the current account balance tends to show a surplus, but also the capital account of
Indonesia is generally in surplus, although the height can change substantially from year to year.
Foreign direct investment (FDI) suffered from the global crisis in 2008 and 2009, but is recovering
strongly in 2010. FDI is expected to be around USD 5bn in 2010 and slightly above USD 3bn in
2011. While the net portfolio investment (PI) flow was negative in 2008 (-/- USD 1.7bn), Indonesia
received a net inflow of USD 8.5bn in 2009. A net portfolio inflow around USD 5.5bn is expected for
this year and around USD 4bn for next year – albeit strongly depending on global risk appetite.
Although portfolio inflows tend to be rather volatile, these levels are the highest Indonesia has
received in the past two decades. The fear of too much short-term capital is therefore not
The stock of foreign exchange (FX) reserves has grown strongly in 2009 and 2010. By end 2008,
the stock of FX stood at USD 49.5bn and it increased to USD 63.6bn end 2009 and is expected to
rise to USD 80bn end 2010 and USD 90bn end 2011.

November 2010                                               Rabobank               Economic Research Department                               Page: 6/8
Country report INDONESIA

External position
The stock of external debt in Indonesia hovers around and is expected to stay around USD 150bn
to USD 155bn in the period 2008-2011. As GDP continued to grow, the relative stock declined from
30% of GDP in 2008 to an expected 20% of GDP in 2011. The bulk of the external debt is medium
to long term (around 80% in 2010) and of that MLT debt most is owed by the public sector (about
65%). Short-term debt accounts for less than 20% of Indonesia’s foreign debt. This part of
Indonesia’s risk profile is thus benign.
The external financing needs of Indonesia are determined by the short-term debt that needs to be
rolled-over every year (about USD 28bn in 2010) and repayments on medium and long-term debt
(a little over USD 31bn). The surplus on the current account balance lowers the financing needs for
this year by USD 10bn.

Chart 9: External debt stock                                                         Chart 10: External financing needs
       bn USD                                                       % of GDP                bn USD                                                                     bn USD
160                                                                            60    60                                                                                          60

120                                                                                  40                                                                                          40

 80                                                                                  20                                                                                          20

 40                                                                                   0                                                                                          0

  0                                                                            0     -20                                                                                         -20
          05       06        07         08       09       10e        11f                        05          06          07            08         09          10e       11f
      Public MLT   Private MLT     IMF debt   Short-term debt    Debt to GDP (r)          Short-term debt        MLT-repayments due        Current account     Financing requirement

Source: EIU                                                                          Source: EIU

The bulk of the financing requirements is met through debt financing. In 2009, Indonesia attracted
USD 47bn in debt creating flows of which two thirds was short-term debt. The remaining third was
split among several sources of medium to long-term debt, such as international bond issues and
commercial bank loans. Clearly, not all debt flows added to the debt stock as Indonesia rolled-over
much debt. For 2010, debt flows are expected to add up to USD 46bn. In the past years, the
financing result has been positive, which has boosted the foreign exchange reserves.
The growing FX reserves support Indonesia’s liquidity position, which can be considered acceptable.
However, it must be noted that Indonesia can be sensitive to changes in investor sentiment
towards emerging markets. The import cover is expected to be around a comfortable 7 months in
2010/11. Moreover, the FX reserves are estimated to cover almost 150% of the debt service due in
2010 and even 175% in 2011. Finally, the liquidity ratio is above 100% and expected to rise.

Chart 11: External financing sources                                                 Chart 12: Liquidity position
        bn USD                                                        bn USD               months                                                                            %
 60                                                                            60    12                                                                                          350

 40                                                                            40    10                                                                                          300

 20                                                                            20     8
  0                                                                            0      6
-20                                                                            -20    4
-40                                                                            -40    2                                                                                          50

-60                                                                            -60    0                                                                                          0
          05       06        07         08       09       10e         11f                      05           06          07        08            09           10e      11f
                                                                                               Import cover (l)                                  Short-term debt cover (r)
           Investment financing                    Debt financing
                                                                                               Debt service cover (r )                           Total foreign debt cover (r)
           Financing requirement                   Financing result (l)

Source: EIU                                                                          Source: EIU

November 2010                                                        Rabobank              Economic Research Department                                                                Page: 7/8
Country report INDONESIA

Selection of economic indicators                               2005            2006          2007          2008         2009            2010e          2011f
Key country risk indicators
  GDP (% real change pa)                                       5.7              5.5           6.3           6.0          4.5             5.9            6.0
  C onsumer prices (average % change pa)                       10.5            13.1           6.3           9.9          4.8             5.3            7.0
  C urrent account balance (% of GDP)                          0.1              3.0           2.4           0.0          2.0             1.5            1.7
  Total foreign exchange reserves (mln USD)                   33141            41103         54976         49597        63563           80100          90340
Economic growth
  GDP (% real change pa)                                       5.7              5.5           6.3           6.0          4.5             5.9            6.0
    Gross fixed investment (% real change pa)                  10.9             2.6           9.3          11.9          3.3             8.2            8.8
    Private consumption (real % change pa)                     4.0              3.2           5.0           5.3          4.9             4.7            5.3
    Government consumption (% real change pa)                   6.6             9.6           3.9          10.4         15.7             1.0            6.4
    Exports of G&S (% real change pa)                          16.6             9.4           8.5           9.5         -9.7             11.2           7.9
    Imports of G&S (% real change pa)                          17.8             8.6           9.1          10.0         -15.0            13.4           8.5
Economic policy
  Budget balance (% of GDP)                                    -0.4            -1.0          -0.7          -0.6         -1.6             -1.5          -1.4
  Public debt (% of GDP)                                        35              33            31            28           27               26            25
  Money market interest rate (%)                               6.8              9.2           6.0           8.5          7.2             6.4            7.5
  M2 growth (% change pa)                                       16              15            19            15           13               19            19
  C onsumer prices (average % change pa)                       10.5            13.1           6.3           9.9          4.8             5.3            7.0
  Exchange rate LC U to USD (average)                          9705            9159          9141          9699         10390            9114          8962
  Recorded unemployment (%)                                    11.2            10.3           9.1           8.4          8.1             7.1            6.7
Balance of payments (mln USD)
  C urrent account balance                                            277        10860         10492              125      10747           10490         13410
    Trade balance                                                17535           29661         32754         22916         35132           36550         39430
      Export value of goods                                      86995          103528        118014        139606       119481           145120        161570
      Import value of goods                                      69463           73867         85259        116690         84348          108570        122140
    Services balance                                              -9123           -9875        -11842       -12998        -14108          -14210        -13760
    Income balance                                              -12926           -13790        -15524       -15156        -15140          -16740        -17180
    Transfer balance                                                 4792            4863          5103          5364         4860             4900          4920
  Net direct investment flows                                        5272            2188          2254          3418         1929             5040          3300
  Net portfolio investment flows                                      504             492          2722         -1755         8543             5650          3750
  Net debt flows                                                  -3230               137          7618          5082         2253            -2960           -540
  Other capital flows (negative is flight)                        -4396              -5820         -8750    -12154            -8994           -2290         -9680
  C hange in international reserves                               -1573              7857      14336            -5283      14478           15930         10240
External position (mln USD)
  Total foreign debt                                            146266          132512        142638        150851       156740           154560        153170
    Short-term debt                                              17173           20547         27456         26565         31295           28950         28200
  Total debt service due, incl. short-term debt                  56338           42100         43352         49606         49773           54260         51580
  Total foreign exchange reserves                                33141           41103         54976         49597         63563           80100         90340
  International investment position                            -124855          -136856       -169168      -146307              n.a.            n.a.          n.a.
    Total assets                                                 60614           74432         97539         78982              n.a.            n.a.          n.a.
    Total liabilities                                           185469          211288        266707        225289              n.a.            n.a.          n.a.
Key ratios for balance of payments, external solvency and external liquidity
  Trade balance (% of GDP)                                     6.1              8.1           7.6           4.5          6.5             5.2            4.9
  C urrent account balance (% of GDP)                          0.1              3.0           2.4           0.0          2.0             1.5            1.7
  Inward FDI (% of GDP)                                        2.9              1.3           1.6           1.8          0.9             1.2            0.9
  Foreign debt (% of GDP)                                       51              36            33            30           29               22            19
  Foreign debt (% of XGSIT)                                    135              107           101           91           110              90            80
  International investment position (% of GDP)                -43.7            -37.5         -39.1         -28.7         n.a.            n.a.          n.a.
  Debt service ratio (% of XGSIT)                               52              34            31            30           35               32            27
  Interest service ratio incl. arrears (% of XGSIT)             11               4             4            3             4               3             2
  FX-reserves import cover (months)                            4.3              5.2           6.0           4.1          6.8             6.9            7.1
  FX-reserves debt service cover (%)                            59              98            127           100          128             148           175
  Liquidity ratio                                              103              117           121          109           128             129           134

Source: EIU

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November 2010                                     Rabobank            Economic Research Department                                     Page: 8/8

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Description: Country report INDONESIA Country Risk