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The
Jakarta Post, Jakarta
The House of Representatives is likely to delay
the appointment of three new Bank Indonesia
deputy governors, as legislators will start
a month-long recess on Wednesday. House Commission
IX on state budget and finance was supposed
to have completed the selection process no later
than Oct. 17. Bank Indonesia Governor Sjahril
Sabirin was clearly disappointed with the delay,
saying that according to the existing central
bank law, the House should have wrapped up its
selection process three weeks after the list
of candidates had been submitted to the House.
"That's what the law says, but after submitting
the list so long ago, (it) has still been delayed
anyway. I cannot understand this," Sjahril said,
as quoted by Antara. Sjahril submitted to the
House in February a list of candidates comprising
nine names, to replace Achwan and Dono Iskandar,
whose terms ended earlier this year, and Burhanuddin
Abdullah, who left the central bank to join
the cabinet team of the previous Abdurahman
Wahid administration. As Bank Indonesia is facing
an uphill task in curbing inflation, stabilizing
the rupiah and restructuring the ailing banking
sector, a delay in the appointment of key Bank
Indonesia personnel will be a fresh blow, analysts
have said.
Some legislators said that the selection process
turned out to take much longer than anticipated
as they had also been preoccupied with the need
to pass several crucial bills before the start
of the recess. So far, the House has only completed
the "fit and proper test" on four of the nine
candidates. "The delay will cast a shadow on
BI's performance in carrying out its duties,"
legislator Antony Z. Abidin told Antara. "There
are worries that BI will not perform properly
because of this unfinished business," he said
on Sunday.
Antony also said that certain political parties
"had been maneuvering" in order to have influence
on the independent central bank to further their
political ends. "It appears that some elements
of the House, including political parties, have
felt the need to interfere with the central
bank, which has prevented the House from wrapping
up the selection process on time," he said.
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The
Jakarta Post, Jakarta
The
rupiah is set for another week of dull trading,
in the absence of any signs from home or abroad
likely to alleviate market concerns over prolonged
anti-U.S. rallies and the country's fragile
economy in the midst of a global downturn, analysts
said. Currency analyst Farial Anwar said the
market saw more reason for the rupiah's continued
weakness than for a recovery. "So far nothing
has improved; the economy, security remain as
they were before," Farial told The Jakarta Post
over the weekend. He said Indonesia had yet
to come up with a plan to cope with the economic
gloom that hit the world in the wake of last
month's terrorist attacks on the United States.
The attacks pushed the world to the brink of
recession, forcing emerging markets like Indonesia
off foreign investors' radar screens.
"The market is waiting for signals from the
government that they are actually going to do
something about this situation," Farial said.
Continued rallies protesting the U.S. military
attacks against alleged terrorists in Afghanistan
have also put at risk relations with international
lenders. This development weighed on market
sentiment, Farial said. He said the Asia Pacific
Economic Cooperation (APEC) summit in Shanghai
should be an opportunity to clarify Indonesia's
position with foreign leaders. That should help
subdue the anti U.S. protests here, while ensuring
donor countries remained committed to Indonesia,
he said. Posing another obstacle to the rupiah's
recovery was the growing demand for the U.S.
dollar, he added. Farial said dollar supply
was depleting fast, as importers piled up inventories
in anticipation of a surge in consumer demand
ahead of the year-end festive season.
This
would strike the rupiah at a time when the currency
market was devoid of foreign investors' dollars.
He said Bank Indonesia would likely remain the
only dollar seller in the market. At its current
levels, however, the rupiah could find solace
from players seeking to take profit on the dollar,
he said. The rupiah fell back to 10,000 territory
and closed last Friday trading at 10,085 compared
to 9,965 a week earlier. Farial predicted the
rupiah would linger this week at around 10,000
to 10,200. In the stock market, analyst Irwan
Junus of Indosuez W.I. Carr Securities warned
the absence of positive news could cap the index's
upward trend. Defying the downturn among its
regional peers, the Jakarta Stock Exchange Composite
Index edged up higher in last week's trading
to end at 387.85 points, against 378.79 a week
before.
But Irwan said that securities firms enticing
stock trading and not bargain hunting investors
had pushed the index up. "Many investors have
switched from stocks to investing in fixed income,"
he explained. For this week, he said, the market
would watch with interest the government's plan
to divest state owned cement firm PT Semen Gresik
amid protests from regions where the company
operates two units. The government plans to
sell the company to Mexican based cement maker
Cemex SA de CV for about US$520 million. Irwan
said that going ahead with the divestment would
give assuring signals to foreign investors eyeing
other Indonesian assets.
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