Indonesia’s trade performance worsened time after time, as seen in current transaction which remained in deficit. In Q II/2015 deficit was up to become USD 4.5 billion (2.1 %of GDP) against previous quarter at 3.8 billion (1.8% of GDP). Vice Chairman of Commission VI of House Heri Gunawan stated that swelling deficit was only stopped by reduced importing against reduced export. Investment flow was constantly in deficit due to massive money borrowing from overseas resources by corporate and increased private overseas deposit causing capital transaction to drop.
The result was that surplus of existing capital and financial was unable to close deficit in balance of payment at USD 2.9 billion in Q II/2015.
Under such circumstances forex reserves was vulnerable and constantly eroded as the Government had to pay overseas debt in no ignorable amount. Until Q II/2015 the total overseas debt due had swollen to USD 304.3 billion, consisting of debt of the public sector USD 134.6 billion (44.2 % of total debt) and debt of the private sector USD 169.7 billion (55.8%) of total debt.
Deficit was a strong signal of ̋crisis ̋, and it was more than just fear but real and tangible threat as proven by disheartening export performance and low investment. It was not surprising that the Minister of Trade called a number of officials at the International Trade Center (ITPC). It was very likely to happen to consider that export of non oil-gas commodities to same countries dropped alarmingly. Export to the USA inched down by 0.4%, to Japan 8% and China dropped by 13.3 and remember that those countries were Indonesia’s main export destination countries with sizable market share of 30.8%.
He underscored once again that export to those countries affected national economy significantly. Moreover recently China as one of Indonesia’s 3 main export destinations devaluated their Yuan. It was a rational way to increase their export and must be responded the rational way too by pragmatism with the spirit of being on the side of domestic interest.
According to Heri Gunawan, the Ministry of Trade and the Ministry of Industry must coordinate actively to increase performance and to be pro-market as growth propeller if economy. Government not being Serious.
Meanwhile member of House Jazilul Fawaid rated that the Government was not serious in anticipating weakening of Rupiah against USD and in dealing with global economy recovery. Such was under scored during meeting with Government’s representative in Parliament, The Government had failed to anticipate fall of Rupiah to as low as Rp.14.000 per USD and Government also failed to predict devaluation of Yuan by China. Now the Government was urged to find a way out.
In the future the Government was expected to anticipate problems instead of waiting till it go too late. Now it was not anticipation which was needed but act of emergency. It was advisable for the Government to call national businesspeople and seek for solutions.
Heri Gunawan highlighted fund transferred to the regions amounting to Rp.782.2 trillion which was bigger than Government’s expenditure. It was expected that the fund would reach the provinces soon. The Government and House could instruct the regions but did the local Government had the ability to execute budget or not?
If the provinces had no capability to execute budget, high amount of would stay idle in local banks the way it was happening now. The Government wished to accelerate even distribution on development but what happed was the reverse. Although the Government tried to make breakthrough, without support of competent leadership in the regions nothing would change.
In principle the Government supported transfer of money to the regions, but the problem was shortage of strong leadership in the provinces. The singer not the song Managerial competence was needed to keep things running. (SS)
Business New - September 2, 2015