President Calls for Adjustment of Key Rate

Jakarta - President Susilo Bambang Yudhoyono appealed to Bank Indonesia (BI) on Monday to adjust its key rate to attract more investment particularly after global rating agencies had raised the country's sovereign debt rating to investment grade. "The interest rate must be adjusted, on the one hand to keep the inflation rate in check, and on the other to provide (low-cost) financing sources to the business world and the industrial sector," he said at the Indonesia Stock Exchange. The key rate, locally known as BI rate, currently stands at 6.0 percent. But the President did not say how specifically the key rate should be adjusted to reach the ideal level to attract more investment. "What is important is that both the government and BI will always try to safeguard it by issuing fiscal and monetary policies when investment begins to flow in," he said. Business agents must be able to benefit from any opportunity and make innovations to boost Indonesia's economic growth, he said. He said the investment grade status gained by the country was bound to have a positive effect. The grade would shore up the business world's confidence in Indonesia as an investment destination. "It means there will be more investment opportunities in the country, for both direct and portfolio investments," he said. "We declare infrastructure development a large scale project. The use of state budget funds will be directed (to the infrastructure development)," he said. He noted that lack of infrastructures in Indonesia was one of the factors about which investors had frequently complained. Therefore, the government had committed itself to create a number of supporting conditions, including budget allocations to develop infrastructure, he said. (*)