ABSTRACT
In 2005–2016 the external debt of ASEAN-8 increased. It indicates that ASEAN-8 needs more money for the domestic economy. ASEAN-8 covers Indonesia, Lao PDR, Cambodia, Myanmar, Malaysia, Thailand, Vietnam, and Philippines. This research examines the impact of gross domestic product (GDP), export, reserved asset, corruption perception index (CPI), and budget deficit on external debt in ASEAN-8 in 2005–2016. It refers to Saleh (2008), Tarsilohadi (2005), Ouyang and Rajan (2013), Batubara and Saskara (2005), Cooray, Dzhumashev and Schneider (2017), and Qian and Steiner (2017). This research uses the Fixed Effect Model (FEM).
This research concludes that: GDP has a positive impact and significance on external debt; export has a negative impact and significance on external debt; CPI has a negative impact on external debt; while reserved asset and budget deficit have no significance on external debt. Based on this result governments of ASEAN-8 can use export and CPI to control external debt levels. In addition, the governments can also increase GDP to obtain the targeted value of external debt. Meanwhile, the government needs to manage the reserved asset and budget deficit for the domestic economy.
