The Government through the Coordinating Minister of Economy stated that Publicity of Economic Policy Package phase I was low. This was disclosed by the Coordinating Minister Darmin Nasution, who said that the information perceived and comprehension of the public of the Economic Policy Package was below expectation.
According to Darmin, a few days after phase I of economy package was issued, representatives of 4 big banks visited his Ministry. They questioned a Regulation made by a certain Ministry which they claimed might disturb economic climate. And yet the Regulation had been lifted by the Regulation was put in effect.
Pursuant to the matter, the Government had improved illumination approach and publicizing of the Government’s policy. This time the information would elaborated on policy package per sector which would soon be specified in the follow up policy package.
As promised, the National Economic Stimulus Package would be launched. Unlike the September I package, in this September II package the focus would be more on simplification of permit application procedure and use of forex-reserve from. Export the September II package would be announced by the economic ministers led by the Coordinating Minister Darmin Nasution.
In compliance to businesspeople’s request, the September II package assured that permit could be obtained in 3 hours. However, the condition was not unconditional. The 3 hour service was only applicable to investment in the industrial sector.
The way it had been it took 8 days only to apply for company’s permit. To build a factory outside the industrial zone, investors must apply for 11 permits including construction permit which needed 526 days. In the Regulation Package II service was shortened to 3 hours.
Head of the Coordinating Board of Investment (BKPM) Franky Sibarani remarked further that with the 3 hour procedure investors could pocket 3 permits, i.e. Principle Permit, Company’s Deed, and Taxpayer’s ID. For permits outside the Industrial Estate, especially for natural resources, the Government axed 14 permits to become 6 permits including lifting of 9 Ministrial Regulations.
About securing Forex-from-Export (DHE), Finance Minister Bambang Brodjonegoro disclosed there would be axing of interest for fixed deposit in USD for money deposited in domestic banks. For example if deposit was above six months the tax would be 0% or freed from deposit interest tax.
Generally marketplayers responded positively to the issuance of Chapter II Policy Package. Chairman of APINDO Haryadi Sukamdani stated that the Economic Policy Package Chapter II was more applicable and effective for the short term moreover easing of Permit procedures was believed to attract investors.
It was noteworthy that there was signal from the Government that Policy Package phase II was not the last package to be released by the Government because today more rules had the potential to be revised by the related ministers. So far 16 Government Regulation were already dissected and were waiting to be signed by the Minister and the President.
At the ministrial and institutional level 38 regulations had already been discussed. At this level Deregulation was not only a process of simplification but also combinations. After combinations, the 38 Regulation would be reduced to 24.
Among the Regulations being combined was the Regulation of the Minister of Cooperatives and Small l Business (UKM) on coperatives which was the result of simplification of 4 Ministrial decrees.
Previously the Government had announced Economic Policy Package consisting of 134 deregulations, exercised to accelerate macro economic development, to propel national economy, to protect the marginal people and to energize rural economy.
The Economy Policy Package Chapter II was focused on 3 sectors, i.e. industry, export and finance; i.e. to accelerate investment process and to allow tax exemptions. The minimum amount of investment was at least Rp.100 billion or more, employing 1,000 Indonesian workers. Industrial estates already had Environmental Impact Analysis (AMDAL) but still investors must manage wastage treatment.
In the Monetary Policy which was in the domain of BI, relaxation of policy had also been executed Firstly discount on interest taxes on Forex-from-export (DHE). Secondly, relaxation of requirements on unguaranteed export from USD 1 million to become USD 5 million. Thirdly, to increase hedging facilities from only 3 months and 6 months to become 1 year.
As with incentives for the fiscal sector which was in the domain of the Ministry of Finance, was to offer tax holiday, tax allowance or tax amnesty by next year. The procedure of tax facilitating would be made easy. One noteworthy fact was the Government’s plan to axe income tax by next year from 28% to 18% under certain conditions although this plan was still a cases of pro and contra among Ministers.
Players of the moneymarket responded positively to Chapter II of Government policy especially when BI had released follow up of Chapter I on September 9 last to stabilize Rupiah.
Rupiah and IHSG strengthened simultaneously to enter the green zone; the response was far different from the time when the market responded to September package I, at that time Rupiah weakened by 63 points to become Rp.14,307 per USD.
Rupiah strengthening was thanks to BI’s role to cool of the market. While doing market intervention at the spotmarket, BI would also make intervention at the forward market to balance up supply and demand. The conclusion was that all parties responded well to package 2 which was rated as aiming at short term target compared to the first package launched on September 9 last.
The public also remained the Government not stop where they stood. The Government must not be contended with market’s positive response to the Policy Package. The Government must not be astounded with Rupiah IHSG strengthening which was probably only momentary.
While being temporary, the range of Rupiah strengthening was also relatively measurable. Meaning the market did not absolutely respond to the launching of the stimulus package, but there was signs of taking wait-and-see stance. The public rated that the Government was skillful in policy making, but bad in execution. (SS)
Business News - October 9, 2015