Capturing opportunities from Trump’s victory

Jakarta. Shocking! Donald Trump won the US presidential election, outperforming his rival Hillary Clinton, who was widely predicted to be elected. Inevitably, Trump’s victory trigged market’s negative reaction.

With the slogan of ‘Make America Great Again’, Trump will likely become a new uncertainty factor in the world’s economy recovery. Trump’s campaign program on protectionism of US trade policy is expected to change the map of world trade.

Trump’s program to stop several trade agreements, particularly those involving speculation China, will bring speculation related to new trade era. Trump’s victory is expected to make the plan to increase The Fed’s interest rates in December 2016 faded, as Trump infavor of high interest rates.

Chief Economist of Bank Mandiri Anton Gunawan said that Trump’s policy direction remains unclear. As a result, the uncertainty can be higher so that the volatility in global financial markets may also be higher. "The measured risks can be mitigated, but the uncertainty (risk) is difficult (to be mitigated)," said Anton (9/11).

Deputy Chairman of the Indonesia Chamber of Commerce and Industry (Kadin) for International Relations Affairs Shinta Widjaja Kamdani worried that Trump’s protectionist policies will reduce Indonesia’s exports to the US. The Trump’s victory will also disrupt the Trans-Pacific Partnership agreement. "It would be difficult to continue the TPP," he said.

However, President Joko Widodo is optimistic that the result of the US presidential election will not bring large impact on the economic relations between Indonesia and the US, mainly in terms of trade and investment. “The US is one of the five biggest investors in Indonesia”, he said.

Minister of Finance Sri Mulyani Indrawati is also optimistic that the turmoil in financial markets and capital markets as the effects Trump victory are only temporary. "Various indicators show confidentiality. Economic growth, as well as the financing balance are not in the danger zone," he said.

Deputy Governor of BI (the Central Bank) Perry Warjiyo also believes that Trump’s victory has minor impacts on Indonesia's financial markets. Foreign exchange market is also relatively stable.

"International confident on our economic and macro-economic stability will make foreign capital flows and FDI sustainable," said Perry. To date, foreign portfolio in both government bonds and stocks reach almost IDR60 trillion.

However, we need to monitor the changes in a la Trump’s trade map. It is not impossible if Trump’s trade map would change the geopolitical constellation. Let alone, it lately tends to move to the East, specifically to China.

This situation related to the economic crisis in the West that has been occured since 2008 until now. The US collapsed and had to inject billions of dollars into the economic system so as not to fall. Europe followed, even up to now have not been recovered.

In effect, many large corporations in the west collapsed. On the other hand, this led to new investors, generally from the East, such as China. When crisis occured in the western countries, they have successfully exploited the situation by raising capital and investment.

To date, a lot of world’s consolidations are controlled by Chinese tycoons. The newly elected Trump seems to want to change that condition. Thus, our government should be nimble and keen to capture the potential change.

(MUHAMMAD FARID/Translator)