Since early this
year till now Rupiah value against USD had been axed by around 13%. The same
was with IHDG at BEI it had slumped to around 4.300 after reaching 5.500 only
months ago.
Loosely people might say that of
Rupiah and IHSG was because market expectation was not met by the Government.
“The market” in this case could be
defined as business players, share holders or players of the money market. The
Market could also be perceived – in the broader sense of the word – as the
general public. So people expectations was how as the Government could buoy up
economic growth toward healthier macro economy and peoples better welfare.
There were high expectations for
great endeavors that might change economic climate but it seem that the present
condition was still a far cry from ideal condition.
Apparently economic growth which
once reached 6.49% in 2011 continues to drop to 4.7% in Semester 1 of 2015
while IHSG also dropped constantly being vulnerable to external sentiments.
With advancement of IT one
electronic, media, now it was easy for the people to access data resources and
keep abreast whit economic development and evaluate why expectations was hard
to attain.
Global economic slowdown and low capital
expenditure was allegedly the cause of Indonesia’s economic slowdown.
Chairman of the Association of
Indonesian Textile Producers (API) Ade Sudrajdat said that many factories in
Indonesia had stopped their production and reduce the number of employees.
The condition triggered public
anxiety that another crisis would happen the way it happened in 1998 and 2008. More
over today Rupiah was down to as low as Rp.14.200 per USD, while IHSG index
dropped to 4,163.7 on August 24 last.
Under the circumstances stakeholder
of economy urged the Government to promote investment to the maximum to
re-energize the economic machine.
Consequently all the regulations at
the central and provincial level which hindranced investment must be relaxed to
smoothen Government’s budget expenditure.
It was not enough for the Government
to work hard think smart instead. Anyone could “work hard” nut not just anyone
could work smart and produce result.
Indonesia’s forex reserves by August
2015 was posted at USD 1055,3 billion, less than the position by end of July
2015 at USD 107.60 billion. In fact Indonesia’s forex reserves had been stuck
“at around USD 100 billion” and never increased significantly over the past 2
years since of the past Government mainly because it had been continually
gnawed for making market intervention.
Bank Indonesia had their commitment
to stay on guard at the money market to stabilize Rupiah hereby to support
macroeconomic stability and keep Rupiah from being undervalued. One niche to
pin hope on was foreign currency income from Government’s Samurai bonds which
could be expected to prevent Rupiah’s further slump.
Now market players were looking
forward to Government’s issuance of chapter One of Economy Policy Package to
troubleshoot some macro economic problems. There was one main objective, i.e.
to pull in forex flow abroad to revitalize economy.
This chapter One Integrated Economy
Policy Package was one of the Government’s effort to overcome problems.
Revision of Regulations on Tax Holiday was announced by President Joko Widodo,
who was flanked by the Coordinating Ministers and was broadcasted on TV
Wednesday evening September 9, 2015.
Almost Certainly the Policy Package
would strengthen people’s resistance and purchasing power in this turbulent
climate. Besides, the Rules on Tax Holiday would synergize with another Policy
Package released before to promote industrial development at home such as the
Mining Sector.
The Integrated Economic Policy
Package was a counter-cyclical policy run by the Government in facing the
world’s economic being trapped in the slowdown zone. The year 2016 was not a
good year for global growth because of China’s economy being down-contracted.
Moody’s in their latest report
entitled “Down revision of Economic Outlook 2016”, economic growth of member
countries of G-20 next year was 2.8%, lower than the initial production of
3.1%. The economic condition of China was the reason why Moody Reserves their
projections.
Moody’s saw that by next year China’s
economy only grew by 6.3% against the previous prediction of 6.5%. The slower
growth in China made commodity prices unable to increase in the near future. A
long period of commodity prices might cause income and investment from export of
G-20 countries to be lower.
Indonesia as member of G20 Countries
would be affected by global economic slowdown including China; next year
Indonesia’s growth rate would only be at 4% - 5 %.
The Policy of China as the world’s
second largest economic power was the focus of attention of the world. One of
them was the people’s Bank of China devaluated Yuan for 3 consecutive days on
11 – 13 August 2015 by 2% respectively to jack up export.
The value of Yuan being low, China’s
products would be cheap and be competitive against other countries.
In the previous years, China’s
economic growth had always been above 10%, but this year the growth was below
105 and even 7% at the last quarter.
One of the benefits of devaluation’s
was to command over broader market base apparently base weakening of Yuan had
its influence another countries. Devaluation of Yuan would make Asia Pacific
states axe their respective currencies. Some of the Countries who devaluated
their currency were South Korea, Australia and Singapore who posted cut of more
than 1%. Indonesia was no exception.
Following Yuan’s devaluation, Rupiah
slumped to Rp.14.200 per USD, the lowest level of Rupiah in the past 17 year
since 1998 when Indonesia was under monetary crisis.
In fact even before China devaluated
their Yuan, Rupiah was already under pressure. To calculate from early year,
Rupiah had weakened by 12%.early this year Rupiah was still at Rp.12.545 per
USD while in August 2015 Rupiah sank to Rp.14.035 per USD.
Since early this year, the sentiment
that pressed Rupiah down was in fact not just devaluation of Yuan but also plan
to increase FFR by the Fed in the USA. The process of economic recovery in the
USA since the case of subprime mortgage had begin as showdown by some macro
indicators like unemployment which had improved to 5.1% and economic growth
coming close to 2%.
Based on the bettered economic
indicators, now the Fed planned to increase FFR which at the moment was closed
to 0%.
IF the plan to increase FFR no well
anticipated by developing countries like Indonesia, it would increase and
Rupiah would weaken.
Amidst weakening of Rupiah, the
alarm signal of possible crisis in Indonesia was beginning to be voiced by many
parties. Description of Rupiah was followed by increasing of basic essential
commodities in some cities in Java.
Economic adverse conditions was
normally followed by companies stopping their activities, because of increasing
production cost from imported components and further lead to employees dismissals.
Although actual crisis was not on,
the chain effect of Rupiah depreciation such as de-industrialization and
reduced people’s purchasing power must be watched on. The public expected the
Government to take the lead in taking measures to anticipate crisis.
Business New - September 11, 2015
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