GOVERNMENT APPLIED FOUR ECONOMIC POLICIES

The government implemented four economic policies to maintain economic growth and minimize the impact of economic shocks on the business world, so job creation can be maintained. “with these attempts, it is expected that current account deficit in the third and fourth quarter will decline, and economic growth can be maintained. We also combine this policy package of Bank Indonesia and the financial services authority (OJK), which is mainly to stabilize the financial sector and the exchange rate. These packages will be announced separately by Bank Indonesia and OJK”, said Coordinating Minister of Economy, Hatta Rajasa, acting on behalf of President Susilo Bambang Yudhoyono in a announcing the four economic policies at the Presidential Office on Friday (August 23).

The first package, said Hatta, who was accompanied by Finance Minister, Chatib Basri, and the Governor of Bank Indonesia, Agus Martowardojo, is made to improve the current account deficit and Rupiah exchange rate against the dollar. In this package, the step to be taken is to encourage export and provide tax breaks to the export-oriented industries. Then, the government will also reduce oil & gas imports by increasing level of biodiesel in diesel fuel to reduce diesel fuel consumption that comes from import. The government will also establish a higher luxury tax on CBU cars and imported branded goods from an average of 75% to 125%-150%. And, the government will also improve mineral exports.

The second package is to maintain economic growth. The government will ensure that 2013 State Budget (APBN) deficit remains at 2.38% and financing is safe. In this regard, the government provides incentives to labor-intensive, including tax breaks.

The third package is to maintain purchasing power. The government, in this case, coordinates with Bank Indonesia to control price volatility and inflation. In connection with this, the government plans to change the trading system of beef and horticulture, from quota-based imports to price based imports mechanism.

The fourth package is to accelerate investment. The government will streamline the integrated one-stop service for investment licensing. For example, it has formulated the trimming of process of up-stream oil & gas licensing from 69 to 9 permits. The government will also accelerate the revision of regulations on Negative List of Investment (DNI), accelerate investment in export-oriented sectors by renegotiation of mining contracts.

Furthermore, strategic infrastructure projects will be accelerated. It was all done so that the current account deficit will decrease and economic growth can be maintained this year.


Business News - August 28, 2013