REPUBLIKA.CO.ID, JAKARTA -- The BB+/positive outlook rating given by the international rating agency Standard and Poor's (S&P) to Indonesia is an indication of the improving investment climate, Capital Investment Coordinating Board (BKPM) Head Franky Sibarani stated.
The international rating agency had recognized the Indonesian government's efforts to implement structural reforms, such as subsidy cuts and investment services provided through the One-Roof Integrated Service (PTSP) system, Franky noted in a press statement here on Thursday.
Franky affirmed that despite Indonesia not having received the "investment grade" level, the BKPM lauded the agency's BB+/positive outlook level given to the nation on June 1, 2016.
"We praise their decision to give us the BB+ rating. After all, improvement in the investment climate is one of the criteria they used to decide the rating standard. They also judged various other aspects, such as the fiscal framework, government debt, and fiscal burden," Franky remarked.
The BKPM chief acknowledged that the rating level given to Indonesia by the S&P had not yet reached the "investment grade" level. However, two other rating agencies, Moody's and Fitch Rating, have placed Indonesia on the investment grade level.
Franky emphasized that in the face of current global economic conditions, marked by the fall in oil prices in the world market and the revision of the global growth, the S&P rating for Indonesia was a positive sign.
In its official statement, the S&P stated that Indonesia could continue to further improve its rating if its institutional governance, the fiscal policy framework, in particular, could result in better quality government spending, a declining trend of fiscal deficit, moderate government debt, and limited contingent fiscal liabilities.
Franky viewed the S&P rating as a constructive input. The government is now determined to ensure the success of the economic reforms issued by President Joko Widodo through a series of its policy packages.
"The president has set up a task force to monitor the implementation of the policy packages, both in Jakarta and the other regions," he noted.
The BKPM will continue to optimize the utilization of the PTSP system in the regions.
The Ministry of Home Affairs and other relevant ministries and institutions will implement service standards and simplify the licensing procedures for the PTSPs in the regions.
Last month, a delegation of the S&P had met with President Widodo and Coordinating Minister for Economic Affaris Darmin Nasution. The delegation also visited the PTSP center at the BKPM in Jakarta and reviewed several facilities provided to the investors.
The "sovereign credit rating" provided by the S&P constituted an assessment by the agency of the investment risks in a country, and in this case, in Indonesia.
The rating is generally used by investors both for calculating their portfolio instruments, such as in government securities and for other financial calculations, such as in taking loans.
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