Indonesia has been one of the top investable markets in the region by portfolio fund managers, according to a paper here Wednesday.

The status was based on a set of positive figures of the country's macroeconomic indicators with the inflation rate and international trade performance data showing improvements, a recent release by the statistic agency showed.

The agency reported Indonesia's May headline inflation was 6.04percent, which reflected the volatility of world commodity prices, the Jakarta Post said.

On the trade front, continued weakness was recorded with April's exports falling 22.9 percent with total exports down 29.5 percent. But commodities, ores, slag, and ash contributed most to the deceleration in month-to-month exports, followed by rubber.

Based on export destinations, China, the U.S., and Japan contributed 31.7 percent of Indonesia's total exports. On the flipside, mineral fuel (e.g. coal) exports were up 25 percent, followed by machinery/electricity equipment.

While exports still booked negative growth, the amount showed an improvement. Coupled with 4.4 percent economic growth in the first quarter (the highest in the region after 6.1 percent for China and 5.8 percent for India), Indonesia is currently amongst the top investable markets in the region for portfolio fund managers.

The data show that as of May 29, 2009, foreign investors in government bonds increased holdings by 5.2 trillion rupiah or nearly 510 million U.S. dollars. In order to maintain this positive sentiment, the government must continue to work hard amid the current presidential elections with continued market-friendly policies.

While this is somewhat controllable, external factors such as rising oil and other commodity prices are not. And this could adversely impact on the government budget through increased oil subsidies.

Source: Xinhua