REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia warns of the after effects of Britain pulling out of European Union (Brexit) on Indonesia despite statement by the government that there would be no significant impact on the country's economy.

The effects of Brexit on trade between Britain and the remaining members of the EU could also have negative impact on Indonesian export performance, Communications Executive Director of the central bank Tirta Segara said here on Sunday.

Europe minus Britain is a major trading partner of Indonesia accounting for 11.4 percent of the country's exports with commodities dominated by raw materials, Tirta said.

"Bank Indonesia would continue to watch the risk potential after the British referendum," he said.

Earlier, Governor of the central bank Agus Martowardojo said the after effects of Brexit has been expected on global financial market.

Agus said the Brexit sentiment may continue to hang over the global financial market as the political process of Britain quitting the EU would take some time.

In line with the EU Treaty, Britain has to submit official request to quit the EU, he said, adding, there would be negotiations including on trade tariffs and economic incentives.

The dynamics in the process of negotiations could affect the stability of global financial market, he added.

"The implications could last for a long time. In short term , there is implication, but we see long term implications," he said.

Mid term implications

However, the central bank said the mid term impact of Brexit on trade , financial market and investment would be limited.

Based on data held by the central bank, Britain accounts only for less than 10 percent of foreign direct investment in Indonesia in the past five years. British investment in the Indonesian financial market was also relatively small.

After the result of the referendum was announced on Friday, rupiah traded at the level of 13,296 per U.S. dollar losing its value only slightly from the level of 13,265 per dollar on Thursday.

The composite index of the Indonesian Stock Exchange fell 39.74 points or 0.81 percent to 4,834.56 points in mid day trading on Friday but rebounded later in the closing hour.

"The corrections in the financial and stock markets were limited especially in comparison with other countries such as India, Thailand and South Korea," Tirta.

The central bank said the country's economic fundamentals are well protected as reflected by the low inflation, current account deficit being under control, rupiah exchange rate which is relatively stable, he said.

Finnish Finance Minister Alexander Stubb said Brexit was not a disaster to the world but its impact would hit Britain itself, the EU and Britain's main trading partners mainly the United States.

The impact on other countries especially Asia would be insignificant, Stubb said.

Indonesian Finance Minister Bambang Brojonegoro also said Brexit would have no significant effect on Indonesia said.

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