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Indonesia May Be Ready To Join BRICs, Fund Says
Berni Moestafa | January 28, 2010

The Jakarta stock market was the second-best performer in Asia last year. (Antara Photo/Andika Wahyu) The Jakarta stock market was the second-best performer in Asia last year. (Antara Photo/Andika Wahyu)
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neucessor
1:56pm Jan 29, 2010

Considering the level of technology and research, Indonesia is still way behind BRIC. Brazil has an aircraft industry, India and China as we know have nuclear capabilites, also Russia with its military industry.

As long as Indonesians only exploit its natural resources as its source of growth, then the money is going to end up for buying technology products.

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Indonesia looks increasingly like a worthy member of the economically enviable “BRIC” group of nations, following this week’s upgrade of its sovereign debt and a nod of recognition from influential global asset manager Templeton Asset Management

After boasting Asia’s second-best performing stock market last year, the country may be ready for full-fledged membership in the BRIC group of major emerging nations, Templeton said.

“Indonesia’s political and economic outlook has improved tremendously in recent years,” Templeton portfolio manager Dennis Lim wrote in a note on chairman Mark Mobius’s blog. “So clearly, it would not look out of place beside the BRIC countries.”

Inclusion in the category — Brazil, Russia, India and China — coined by Goldman Sachs chief economist Jim O’Neill may increase demand for Indonesian stocks. Investors should “stick with the BRICs,” a group that “tends to outperform in non-recession years,” Morgan Stanley strategists said last week.

The Jakarta Composite Index rose 87 percent last year as the country largely skirted the global recession.

President Susilo Bambang Yudhoyono’s re-election in July boosted confidence that he will maintain policies that helped the economy, Southeast Asia’s biggest, expand by more than 6 percent annually in the two years until 2008. Growth may average 6.6 percent over the next five years, Yudhoyono said this month.

On Monday, Fitch Ratings raised Indonesia’s credit ratings to one level below investment grade. The move reflected the country’s economic resilience and an improving balance of payments, said Bank Indonesia Deputy Governor Hartadi Sarwono. Foreign-exchange reserves rose to $69 billion as of last week, he said.

BRIC funds are gaining in popularity. “The BRICs theme, which played well in 2009, continues to resonate in early 2010,” according to EPFR Global, a Cambridge, Massachusetts-based funds tracker, on Jan. 21. In the third week of January, “dedicated BRIC equity funds recorded inflows of $182 million, right around their weekly average year-to-date versus the $103 million they averaged last year.”



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