Jakarta (Antara Bali) - Head of the Fiscal Policy Agency of the finance ministry Bambang Brodjonegoro said the stability of the Indonesian bond market is hardly affected despite threat of capital flight on speculation about tapering of US central bank monetary stimulus.
"Domestic bonds held by foreign investors are still relatively stable. There has been outflows and inflows but it is relatively stable," Bambang said here on Friday.
He said the Indonesian bond market is not that vulnerable. However, he admitted capital inflows and outflows in Asian emerging markets still depend largely in global condition especially US financial condition.
"Previously in the era of President Bush administration the capital market grew sharply. Now with the quantitative ease plan the fall looks steep but it is not as sharp as the rise," he said.
However, the interest investors have shown in Indonesian bond market could decline and could be easily affected by turbulence still besetting advanced countries, he said.
Earlier, Asian Development Bank (ADB) described as good the prospects in local bond market in East Asia but also warned of potential disruption of the good prospect from the US monetary policy, economic slowdown in Asia and capital outflows.
"Investors and Asian bond markets are still in a better position than they were in 1997-1998," chief of ADB office for Regional Economic Integration Iwan Jaya Azis said.
Iwan said the challenge in Asian bond market lies in yield, which is too high and falling value of assets that could affect corporate performance and cause worse economic slowdown.
Based on ADB record, Indonesian bond market grew 12.4 percent in the second quarter of 2013 with value reaching US$118 billion.
The strong growth was attributed to 23.6 percent growth of corporate bonds to US$21 billion and 10.3 percent expansion of government bonds to US$97 billion, it said in a news release.
Based on the trend, ADB estimated demand for Indonesian government bonds rose in the second quarter of 2013 that the target of bond issues at Rp231.8 trillion net could be achieved to cover a state budget deficit of 2.4 percent of the Gross Domestic Products (GDP).
By the end of June there were US$6.8 billion worth of fund in local currencies in bond markets in East Asia developing economies including China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore , Thailand and Vietnam.
In order to strengthen and boost growth of bond markets, ADB recommended creation of adequate financing sources including foreign investment, which is better in stability than bond market and encouraging new investment including in pension funds.
Investment in insurance and pension funds and guarantee funds could contribute to funneling funds to the transport, energy, telecommunications and other infrastructure sectors.
ADB said Asia needs US$8 billion funds to finance infrastructure projects in 2010 - 2020 to sustain economic growth , however, currently developing economies have lost the momentum to utilize bond funds to finance infrastructure projects. (*/DWA)
COPYRIGHT © ANTARA News Bali 2013
"Domestic bonds held by foreign investors are still relatively stable. There has been outflows and inflows but it is relatively stable," Bambang said here on Friday.
He said the Indonesian bond market is not that vulnerable. However, he admitted capital inflows and outflows in Asian emerging markets still depend largely in global condition especially US financial condition.
"Previously in the era of President Bush administration the capital market grew sharply. Now with the quantitative ease plan the fall looks steep but it is not as sharp as the rise," he said.
However, the interest investors have shown in Indonesian bond market could decline and could be easily affected by turbulence still besetting advanced countries, he said.
Earlier, Asian Development Bank (ADB) described as good the prospects in local bond market in East Asia but also warned of potential disruption of the good prospect from the US monetary policy, economic slowdown in Asia and capital outflows.
"Investors and Asian bond markets are still in a better position than they were in 1997-1998," chief of ADB office for Regional Economic Integration Iwan Jaya Azis said.
Iwan said the challenge in Asian bond market lies in yield, which is too high and falling value of assets that could affect corporate performance and cause worse economic slowdown.
Based on ADB record, Indonesian bond market grew 12.4 percent in the second quarter of 2013 with value reaching US$118 billion.
The strong growth was attributed to 23.6 percent growth of corporate bonds to US$21 billion and 10.3 percent expansion of government bonds to US$97 billion, it said in a news release.
Based on the trend, ADB estimated demand for Indonesian government bonds rose in the second quarter of 2013 that the target of bond issues at Rp231.8 trillion net could be achieved to cover a state budget deficit of 2.4 percent of the Gross Domestic Products (GDP).
By the end of June there were US$6.8 billion worth of fund in local currencies in bond markets in East Asia developing economies including China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore , Thailand and Vietnam.
In order to strengthen and boost growth of bond markets, ADB recommended creation of adequate financing sources including foreign investment, which is better in stability than bond market and encouraging new investment including in pension funds.
Investment in insurance and pension funds and guarantee funds could contribute to funneling funds to the transport, energy, telecommunications and other infrastructure sectors.
ADB said Asia needs US$8 billion funds to finance infrastructure projects in 2010 - 2020 to sustain economic growth , however, currently developing economies have lost the momentum to utilize bond funds to finance infrastructure projects. (*/DWA)
Editor : Dewa Sudiarta Wiguna
COPYRIGHT © ANTARA News Bali 2013