TO SACRIFICE FOR NATIONAL ECONOMY

All the hassles in Indonesia’s economy lately opened opportunity for speculators. One of the indicators of economic weakening was nose-diving of currency exchange rate value. Fluctuation of Rupiah exchange rate value against USD was getting steeper time after time.

There was general perception that each time there was unrest in currency exchange rate, there was bound to be some speculators who were taking advantage of the situation. To illustrate speculators cleans weep USD when the price came to Rp 9,500 per USD. The dollars were hedged while waiting for another opportunity. Speculators might even spread rumors to make the public panic.

As people’s panic heightened, price of USD tuned more expensive. That was the time they release their USD at Rp 10,000.- per Dollar. All in all they reaped profit of Rp 500 per USD. It was easy to imagine how speculators make profit in a split second from changing exchange rate.

One thinkable way to neutralize speculative attitude was by inducing nationalistic sentiment. It was about time to stop speculators from taking excessive profit by changing habit of the money market into constructive paradigm. Speculators must be made aware that the monetary advantage they were enjoying was obtained at the cost of disadvantage to national economy which in the end would backlash on them through inflation etc. There would be more people who suffer inducing the speculators themselves.

Before Rupiah exchange rate value touched the Rp 11,000.- level BI had made maneuvers to rescue Rupiah. Among the measures taken was to increase BI’s benchmark rate. The objective was to control inflation and pressures on Rupiah could be eased. Although the direct effect was not visible, at least BI’s step had helped to ease panic in the market.

The only thing was that chain effect of increased BI rate was inevitable as banks were preparing to adjust their credit interest in the near future. They argued that if credit interest was not increased, the profit level would be reduced by increasing cost. It seemed reasonable that the Indonesian Chamber of Commerce [KADIN] had pled banks at home to sacrifice to restore domestic economic adverse condition.

Sacrifice of the banking sector could be implemented by way of increasing fixed deposit interest without increasing credit interest.

Banks operating in Indonesia tend to make big profit. National economy was not in the state of good health, so if the remedy tend to be painful, banks should try to cope with it. Meaning if they were pled not to increase credit interest to push national economic growth, it was a sacrifice worthy of appreciation.

To the Government it was recommended to encourage companies whose capacity was good to increase export procedures and giving them soft loan for strengthening capital. KADIN also proposed to set up a service center to help companies having difficulties in applying for business permit. It was even proposed to set up a crisis center of complaint center if deemed necessary.

KADIN was ready to set up a complaint center provided that the Government would help in terms of permit issuance. Ease in doing business for exporters was expected to step up export and increase employment opportunities at home.

KADIN reminded the Government it might be necessary for the Government tighten waist belt after announcing the Four sided Economic condition at home, which was believed to be necessary.

The Government must be able to restrict oil-gas importing, dependency on imported raw materials and import of luxurious goods not related to industry and not related to public need. Indonesia’s condition today was like a patient not just suffering from flu but also other complications like stroke and heart attack, so comprehensive treatment was called for.

The Government was also reminded that to tighten waist belt could be by way of minimizing travel expenses for Government officials and minimizing use of technology for less important teleconferences. To make more for ex, the Government was advised to aggressively launch promotion for tourism which was highly potential.

Arrival procedures for foreign tourists should be made easy not just in Jakarta and Bali but also in other regions. A small country like Singapore could coin around USD 5 billion per year from Indonesian citizens to come to Singapore to shop or to get medical treatment. Indonesia treasured abundant natural resources and rich heritage which could serve as tourist destination whether for culinary tourism, cultural tourism etc.

In short, the above KADIN’s recommendation was worth taking into consideration by the Government as they were feasible and reasonable. It was true that the Government had schemed up Four Economic Strategy Package but they still needed to be elaborated into more detailed technical guidelines where by to put them in effect. The faster the better, but sense of crisis was called for from all parties as well as willingness to sacrifice a little for the sake of national economic restoration.

Business News - September 6, 2013