Commentary: Indonesia's financial market realities must be dealt with soon

Indonesia has managed a challenging global environment pretty well.

The Trump administration continues to weaken the global rules and institutions which have underpinned much of Asia’s prosperity, particularly the World Trade Organisation. Sixty per cent of Jokowi’s infrastructure promises were to be funded by state-owned enterprises and the private sector. But to date, state-owned enterprises have funded almost 100 per cent and have become substantially more indebted as a result.There are concerns in what has been a relatively stable banking system in the past decade. High demand for loans in 2018 and portfolio capital outflow have drained liquidity from Indonesia’s banks, particularly smaller banks.

The law creates a Crisis Committee consisting of Bank Indonesia, the Financial Services Authority, the Deposit Insurance Agency and the Ministry of Finance. If a troubled bank needs emergency assistance, there must be agreement between all four.

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