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
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