Djalil's nonsense

From The Jakarta Post today.¹ It's him again. Now, the Minister is saying: to foster competition, you need to reduce the number of players.

Oh my God.

¹ The Jakarta Post is so lame in its web version. As I'm writing this, its website is still of yesterday's news. OK, I'll just tell you then. The Minister of Communication and Information, Sofyan Djalil told the press that the Government is thinking to ask private TV stations to merge. It is "a move [the government] believes will streamline the sector for healthier business competition and the development of regional stations". In Djalil's words, "National television stations should merge to create healthy competition and survive. With fewer stations, we could provide fairer frequency allocation". Oh, now I see. It's a matter of government incapability. Here's a suggestion: think about price.

Mid 2006 Look

The first semester has just passed. Here's a summary:

Growth. Government’s target of 5.9 percent growth (revised down from 6.2 percent) this year is unlikely. We maintain our forecast of 5.4-5.7 percent. As for point estimate, it is close to 5.5 percent.

Inflation. Bank Indonesia is on the right track (i.e. tight monetary policy). So is the Ministry of Finance (fiscal expansion). As a result, inflation is relatively tamed. BI loosened up a bit by decreasing its policy rate to 12.5 percent. The percentage differential to US Fed is still 625 basis point. If The Fed keeps its rate at 5.25 percent, there is still room for BI to lower its own to 12 percent. The fiscal expansion, on the other hand, has not promoted growth as expected – most of it goes to government’s capital expenditure, local governments, social aids, and cash transfer program. The main driver of inflation so far is food prices increase. We maintain our forecast of 8-9 percent of inflation this year.

Employment. Unemployment increases. In February 2006 the rate of open unemployment is 10.4 percent, as opposed to 10.3 percent in February 2005. Labor force is close to 160 million. Fiscal expansion has not been helpful for job creation, as promised. SBY has been promoting his “New Deal” program, yet it is unclear.

Exchange rate and stock index. Indonesia’s Rupiah and stock price index are consistent with the regional pattern. However, it shows the highest volatility. The composite index hit an all time high in May 2006, i.e. 1,553.062.

Export. Export value increases. But the figure is illusive. That is, the main drivers of the “increase” are mining and agriculture which in turn benefit from higher international prices.

Expected policies. We still expect fiscal stimulus and stabilizing monetary policy. However, the government’s inability to spend is quite worrying.

Fingers crossed.

Doha is a waste of time

Just got back from Japan. Many things to catch up. For now, as I expected, the WTO's Doha round is failing.