Tag: Indonesia

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Economics

[2638] The market will see through the undisclosed, differentiated Indonesian capital adequacy ratio

Bank Indonesia, the central bank of Indonesia, has been introducing several new institutional frameworks and rulings in the Indonesian economy. I suppose, that signifies that rate of reform in Indonesia.

One is the introduction of a trust fund. It is established to encourage Indonesian firms with earnings from abroad to keep it in Indonesia, at least for a bit longer than what typically happens now. The ultimate goal is to prevent the rupiah from depreciating further.[1] I do not understand how that will keep the money in. That is a polite way of saying, I do not think it will work too well.

Maybe the Indonesian central bankers know more than me about their economy and I am missing a piece of the jigsaw puzzle.

Another is the introduction of a new differentiated capital adequacy ratio ruling. Soon, different bank will face different ratio requirement based on their risks as determined by the central bank. But according to a report in the Jakarta Globe:

Under the new regulation, Bank Indonesia requires a minimum 8 percent capital adequacy ratio — which measures the lender’s financial strength — for banks with the soundest risk profile but it set a higher ratio for the riskiest. In the previous regulation, the ratio was set at 8 percent, regardless of the risk profile.

Bank Indonesia groups the country’s 120 commercial banks into five risk profiles. It usually updates a bank’s risk profile every 6 months but does not make the rankings or their specifications public to avoid a run on deposits at lower-ranked banks. [Dion Bisara. Bank Indonesia Sets New Rule to Strengthen System. Jakarta Globe. December 5 2012]

Bank Indonesia does not make the rankings or the specification public to avoid a run.

That is tough because as long as one can have access to the accounts of a particular bank, one can try to figure out the ratio faced (or really, ratio maintained) by the bank. From there on, the market can imply the imposed ratio.

In other words, the public can find out exactly what Bank Indonesia tries to not divulge. So, here is a ruling that I think is good but as far as risks, bank run and the differentiated capital adequacy ratio are concerned, I am quite certain that it cannot work. Bank Indonesia is revealing the very information it wants to hide.

To come to think of it, in times of banking crisis, it appears that banks with the highest ratio may face the highest likelihood of experiencing a run (ceteris paribus… and knock on wood).

The simplest and the most effective way to have a good ratio and not tell the market anything about individual banks is to impose a more or less uniform requirement across the board. There are issues with uniform requirement but it will address the problem of information superbly.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
[1] — The central bank on Friday took another step to retain foreign earnings by setting up a trustee fund that will ensure steady and sustainable flow of overseas earnings that will be repatriated into the country. The move might also help to stem the rupiah’s depreciation against the dollar by holding income earned from abroad over a period of time rather than being withdrawn quickly. [Francezka Nangoy. Dion Bisara. Central Bank Sets Rule to Keep Foreign Earnings. Jakarta Globe. November 24 2012]

Categories
ASEAN Conflict & disaster Politics & government

[2220] Of Jose Ramos Horta and Indonesia

Some rights reserved. By Mohd Hafiz Noor Shams.

The University hosted President Jose Ramos Horta of East Timor recently and I was lucky enough to get a seat for his speech. After Joseph Stiglitz, the President is the second ever Nobel Prize winner that I have had the opportunity to listen to first hand.

The speech was interesting, but it was not a memorable one. I am unable to recall too many points of the speech.

What I do remember the most is East Timor’s ties with Indonesia.

He is concerned with attempts at punishing Indonesia for past violence in East Timor. He said Indonesia should be given the room to face its own history. The context that Indonesia finds itself in should be understood and taken into account: it at one point came close to repeating the history of the Balkans. That is a painful part of modern Indonesian history. Raising it up would cause old woulds to reopen and ignite an unproductive and divisive debate.

Furthermore, this is not the best time to demand for justice. Such demand at this juncture or in the near future may risk whatever progress, which is a lot, Indonesia is making. He said, such demand would sap energy away from development. President Susilo Bambang Yudhoyono of Indonesia should not be burdened with an international controversy. The fire of nationalism should not be lighted up.

He believes that as Indonesia matures as a democracy, its society will address it eventually. I definitely think that such approach is better at attaining sustainable peace and good diplomatic relations. Although an exaggerated example, the problem of post-World War I Germany comes to mind with respect to effort to punish Indonesia. Keynes was right about Germany and the current President of East Timor may be right about Indonesia.

In other words, it is in East Timor’s interest to have Indonesia focused on its developmental agenda.

He also made it clear that any attempt to set up a tribunal to punish Indonesia would not get the support of East Timor.

And I thought, those were wise words. And I am on board.

Categories
ASEAN

[2093] Of a chance to demonstrate Malaysian goodwill

The very silly spat between Malaysia and Indonesia is a huge disappointment for regionalists who dream to repeat the European experiment of closer integration in Southeast Asia. It may be silly but it has dire ramifications to regionalism in the region. Even if one is not a regionalist but simply a citizen of either country who wishes for his or her own country to take its rightful place in the world, it is in his or her interest to see relationships between both countries blooms. It must flourish for both countries are dependent on each other.

The point on dependency is by no means a mere rhetoric. In 2008, Indonesia was the seventh most important trading partner of Malaysia in terms of total trade. In the same year, Malaysia was among the top five most important trading partners to Indonesia. If hostility hurts trade, clearly both have something to lose from hostility. In times when the world economy is struggling to find its way towards sustained recovery, Malaysia and Indonesia do not have the luxury to let trade between them flounder.

The importance of trade impresses upon the urgency on both sides to find for ways to douse the fire that threatens to burn the ties that bind the two together. Multiple issues ranging from culture, territorial demarcation in eastern Borneo, treatment of Indonesian workers as well as open burning in both countries must be addressed to improve relationship between the two Southeast Asian countries, and more importantly, eventually, people-to-people relations.

Alas, these issues are complex enough that individuals on the street may not be able to appreciate the difficulties faced by both sides. Those complexities demand for both sides to take time in finding solutions that will satisfy all. It cannot be rushed lest it becomes seeds for future discord. Therefore, the same issues cannot be relied upon to immediately improve relationship between the two neighbors.

In the short run, both have to rely on something else.

In this sense, the earthquake that devastated Padang and its surrounding in western Sumatra offers Malaysia an opportunity to improve its relationship with Indonesia. To use a jargon, which is regretfully so popular in the circle of management consultancy in Malaysia, this is a quick win.

Malaysia must quickly mobilize its resources to dispense humanitarian aid to victims of the earthquake in Indonesia. In fact, it is imperative for the Jalur Gemilang to be the first national flag to fly alongside the Sang Saka Merah Putih in Padang if Malaysia is to capitalize on the whole episode. The short distance between the two countries further add weight to the importance of Malaysian presence.

Failure to be the first country to reach Padang could only be seen as incompetence of the Malaysian government. Failure to be the first is a failure of Malaysia as a neighbor and a key member of ASEAN. It is most unacceptable, if Malaysia wishes to have better ties with Indonesia.

Not only that, Malaysia must donate generously. The state government of Selangor for one has allocated half a million ringgit towards relief effort in Padang. This action deserves the highest commendation.

One cannot be deluded in thinking that money can buy good relations however, especially at people-to-people level. One also cannot be deluded in thinking that a one-time event like this — if the Malaysian government as well as other Malaysian organizations played an effective role in the relief effort in Padang — can permanently improve relations with Indonesia.

Good long-term relations depend on how issues between the two countries are resolved.

Nevertheless, the disaster is a stepping-stone towards better long-term relations. It is a chance for Malaysia to demonstrate its goodwill to Indonesians and effectively undermine Indonesian jingoists who seek to disrupt Malaysia-Indonesia ties that in effect jeopardizes regionalist agenda for Southeast Asia, though it may not be those nationalists’ intention.

Malaysia has a chance to set everything on the right track here. It is a chance to show that Malaysians care for Indonesians. One would pray for Malaysia to not blow this golden opportunity in diplomacy.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on October 2 2009.

Categories
ASEAN Conflict & disaster

[2083] Of reaction to the death of Noordin Mohammed Top

Death is always unpleasant for life is always too precious to waste. Hence, I greet the death of Noordin Mohammed Top with a kind of bitter sweet feeling. Part of me regretted it while the other half is happy to learn that regional terrorist network has lost an important figurehead.[1]

His ideal is disagreeable and the mean to his end is even more disagreeable. His death is a testament of the idiom those who live by the sword will die by the sword. Noordin chose that path and he knew it. He violated the non-aggression axiom and by doing so, he legitimized effort taken on his life by others hurt by his actions.

I do not know how this may affect terrorist activity in the region but hopefully, it means reduced probability of attacks in Indonesia. I have mentioned that I have high hope for Indonesia to spearhead democratic change in Southeast Asia and become the symbol of aspiration for all liberal democrats in the region. If indeed the death of Noordin leads to a more stable Indonesia on average, then the development of a democratic Southeast Asia — and really, I am first and foremost concerned with democracy in Malaysia — comes one step closer to fruition.

Apart from that, I do hope the death of Noordin would build a new bridge between Malaysia and Indonesia. It is in this sense that I am most glad that Noordin is now dead. The recent spat between Malaysia and Indonesia has been damaging to regionalism in Southeast Asia. His destructive action has been raised by angry Indonesians as a Malaysian product. Malaysia exports terrorism, as some Indonesians accuse Malaysia.

This is most unfair because the Malaysian government and a majority of Malaysians, as I believe, do not support him. Yet, he was a Malaysian and that is undeniable and that is an embarrassing fact for me to admit, especially to foreigners and to my Indonesian friends.

Nevertheless, a torn is now gone.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — ASIAN terrorist mastermind Noordin Mohammed Top, the man responsible for plotting the 2002 and 2005 Bali bombings, has been killed during an Indonesian police raid against suspected Islamist militants in Central Java.

Top was one of four people who died during the raid yesterday on a militant hideout near Solo, Indonesia’s police chief, Bambang Hendarso Danuri, confirmed last night.. [Bali mastermind Noordin Top killed in Indonesian raid. The Australian. September 18 2009]

Categories
ASEAN History & heritage Society

[2070] Of Indonesia did not create the tune of Negaraku or Terang Bulan

I do feel that in many cases, general Malaysians do have unfair perception of Indonesia as well as have acted unfairly against far too many Indonesians living in Malaysia. But the current sentiment in Indonesia is bordering a ridiculous level. Silly jingoism is playing out in Indonesia.

In the Jakarta Globe, a state recording executive claims that Malaysia — to use the zeigeist of anti-Malaysia in Indonesia — ‘stole’ the tune of Negaraku from the Indonesian song of Terang Bulan.

An executive of Lokananta, a state recording company based in Solo has drawn attention to Malaysia’s national anthem, ”Negaraku,” claiming that it is suspiciously similar in tune to ”Terang Bulan,” a song written by the Bandung Ensemble and first recorded by Lokananta in March 1956 — a year before Malaysia’s independence was announced on Aug. 31, 1957.

”Terang Bulan is a keroncong song, meant for entertainment. Why did they take it for their anthem?” asked Ruktiningsih, head of Lokananta.

”Does Malaysia really have no dignity at all?”

Keroncong is a melodious musical genre that has its roots in Portuguese music and is usually played on violins, flutes and a small, ukelele-like guitar.

Ruktiningsih said that ”Terang Bulan” was one of 49 Indonesian songs recorded in Jakarta by national radio station RRI on the orders of then President Sukarno in 1956. The songs were later made into a record by Lokananta. [Malaysian anthem actually Indonesian, says record company. Candra Malik. Jakarta Globe. August 29 2009]

Let us disregard the fact that modern Southeast Asian states, Indonesia and Malaysia included, did not exist before about mid-20th century. Let us ignore the fact that the current boundary between the two countries only came into existence in the 1820s by virtue of the 1824 Anglo-Dutch Treaty. Let us ignore that culture spread and shared by lands what are now called Indonesia and Malaysia. Let us ignore too that many Indonesian citizens became Malaysians in modern times and that they too practice their culture, which is more or less similar to Indonesian, bar assimiliation process that occurred while their adopt local practice.

Even after discounting those historical accidents, the insinuation is odd.

It is odd because the tune was first recorded to be heard in Seychelles in mid-19th centry, and first played by the government of Perak as its state anthem in 1888 or 1901 in England. On top of that, the tune was composed by a Frenchman. The Federation of Malaya later decided to modify Perak’s anthem into the federation’s anthem. The anthem continues to act as the national anthem of a larger federation called Malaysia when the 11 states of Malaya, Sabah, Sarawak and Singapore decided to federate.[1]

Rather than Malaysia internalizing an Indonesian song, the 1956 Indonesia song originated from the same source as Negaraku. If the executive is to define ownership of the tune as the one that first created it, then both Malaysia and Indonesia have no ownership over it. The ownership should belong to that dead Frenchman.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — See The National Anthem of Malaysia – Negaraku at Malaysian Monarchy. Accessed August 29 2009.