Coordinating
Minister of Economy Darmin Nasution stated that the Policy Package to be issued
by the Government consisted of various economic problem and would consist of
four categories, among other Fiscal and Finance, Deregulation in Investment in
the Industry and Trade Sector, Incentives for Smelters Development and Handling
of Food problems.
The Policy Package related to Fiscal
and Finance Consist of 6 or 7 points, among other Regulations foreign ownership
in the property sector and Deb-to Equity Ratio.
Also Regulation on found expenditure
for village development particularly on activities most important and
beneficial to the rural people likes irrigation, bridges and roads.
The objective of deregulation was to
review to existing rules which held back investment in industry and trading
including the energy sector some were changed, some were simplified and some
were totally revised, all including more than 100 rules.
As with policy related to food, one
of them was distribution of rice-for-the poor (Raskin) for the 13th
and 12th mouth to anticipate food shortage foe the poor during low
season, i.e. extra Raskin for September and another extra Raskin for November.
The Government would probably
announce Category Two regulations related to Deregulation to enhance investment
in the industry and trading sectors, this week at the latest.
Sometime ago the Government had
released a policy package, i.e. fiscal incentive called Tax Holiday. The Minister
of Finance Bambang Brodjonegoro explained that the policy was designed to
strengthen Rupiah and economy. The policy package would not just be for
promoting export but also lift up people’s purchasing power.
Rupiah falling to Rp.14.000 per USD
and slow pipelining of credit was because the world panicked as China devaluated
their Yuan.
The word feared that China’s step
might trigger a “current war” which might lead to serious instability of global
trading.
Naturally in Free Forex Regiema
Rupiah was a currency that could be feely traded for that matter the monetary
authorities must agressively make market intervention to keep Rupiah value I
accidence with national fundamental economy.
To be strong in the money market,
forex reserves was the back up to rely on; but it should be bore in mind that
Indonesia’s forex reserve never inched up from around USD 100 billion for over
a year and amount was continually gnawed by BI for market intervention. Under
the circumstances it was necessary for the Government not just to the monetary
sector but also the enhance development of the real sector.
Government of BI Agus Martowardojo
states that in July 2015 Indonesia had forex reserves of USD 107.6 billion, enough
for financing 7 months of import or 6.8 months of import plus payment of
overseas debt. DSR was safely above international standard of 3 month of
import.
As told, Indonesia was also well
protected by second line defense (SLS) such as Bilateral Swap to anticipate
crisis.
Besides, Indonesia’s economic
condition today was different from that of 1997 and 1998. Indonesia’s economic
growth was minus 13.3% while today growth was positive at 4.9%. Indonesia forex
reserves in 1997/1998 was only USD 23 billion, while in July 2015 it was USD 107.6
billion.
Meanwhile inflation rate in 1998 was
77.63% while today inflation was well under control, low and stable at 4% + 1%
in 2015 and 2015. DSR in 1997 was 120% while today it was only safely at 33% of
GDP.
In terms of finance stability, in
1998 CAR was desperately bad while NPL was high, but in June 2015 CAR of the banking
sector was safely at 20% while NPL was only 2.6% - so it was very unlike that
crisis of 1997 and 1998 would happen again.
Same how the Government and monetary
authorities must stay on the alert in case heavier turbulence come to befall.
Under such circumstances the Government’s willingness to listen to people’s
aspirations and business people’s grievances was called for. Market players
were expecting that the economy policy package to be issued by President Joko
Widodo administration would find would find a breakthrough to solved problems
and induce optimism among market players.
The policy package issued must be me
diocre but it must distinctive. The public expected there would show results in
the short term.
Businesspeople’s warning was valid
because to learn from past experience, Government’s Economic Policy Package was
only responded coldly by investors. For examples, policy packages for the
financing sector which was poor in breakthrough values. Although fiscal
incentives abounds, financing by financial institutions remained ordinary.
Businessplayers were expecting that
the Government Policy Packages were in synergy with institutions like OJK and
BI so the policy would be flexible macro-prudential wise but also enhance the
role of financial sector to be more expansive. While being comprehensive they
should prove to be supportive to be business world and the people, as proven by
market’s positive reaction. (SS)
Business New - September 9, 2015
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