Last year,
to be exact on September 2011 there were still numerous economists, analysts
and business players were confident that the monetary crisis that swept Greece
would never affect Indonesia for many reasons. Among other the portion of
Indonesia’s debt to European states were relatively small, i.e. below 10%.
Relationship between Indonesia’s Financial Institutions and that of Europe was
also relatively limited. In short, Indonesia would be safely apart from the
crisis center in Greece which at later stage infected neighboring countries
Italy, Spain, Portugal and Ireland.
It was not an exaggeration that
Golden Sach, the global financial institution predicted that Indonesia would
only grow by 5.4% before returning to the growth level of 6.3% in 2013. Goldman
Sach economist for the Asean region, Mark Tan estimated that in the short run
Indonesia’s economic growth would slow down due to external influences on the
domestic market.
Economic growth in the following
quarters would be lower as the market was vulnerable to external disturbances.
According to Mark Tan, foreign ownership level at the domestic bond market
which reached 30% made Indonesia more sensitive to capital flight to prevent
global economic turbulence.
The bond market was the main cause
of outgoing portfolio capital from Indonesia which caused deficit in balance of
payment in Quarter I 2012. The ratio of portfolio against Indonesia Balance of
Payment was growing and getting more volatile. This was the main challenge to
the Government in managing USD liquidity at home.
Deficit of Indonesia’s balance of
payment might swell in the event that global economy changed for the worse
which would drive portfolio outflow. Bank Indonesia’s data had it that deficit
of current transaction in quarter I 2012 was posted at USD 2,9 billion or
higher than surplus of capital balance of USD 2.2 billion.
According to Goldman Sach, the
external factor also made its great impact on Indonesia’s fundamental economy,
especially on the inflation side. Goldman Sach research disclosed that
Indonesia’s inflation mood was sensitive to Rupiah exchange rate basket
currency of Indonesia’s trade partners or trade weight index (IDR TWI). Even 1%
weakening of IDR TWI would cause inflation growth of 0.4% in Indonesia, one of
the biggest countries in ASEAN. Today Indonesia’s inflation was influenced by
two factories, i.e. (1) down turn of world’s oil price which had its positive
impact and (2) Rupiah volatility which had its negative impact.
The Central Board of Statistics
(BPS) stated that inflation rate of consumers price year to date in January –
May 2012 was 1.15% or higher that inflation rate of same period of 0.51%.
However, aggressive measures by Indonesia’s financial authorities on the
moneymarket and lessened global economic uncertainty in post election era in
Greece had eased external pressures on Indonesia.
Foreign Direct Investment (FDI)
would still grow steadily because Indonesia’s attractive fundamental economy
like the growing Number of young and productive people or the rising new middle
class which was growing fast. With strong fundamental economy Indonesia might
feel confident to rebound and grow by 6.3% due to recovery of global demand.
It was noteworthy that there were
two channels by which Europe’s crisis were transferred to Indonesia, i.e. the
financial sector and the trading sector. The effect of transmission by
financial channel was depreciation of the Rupiah value through this year and
downturn of the IHSG stockmarket and BEI Security Exchange.
It seemed reasonable that the
Government, cq Bank Indonesia on behalf of the respective institutions or the
bodies collectively had set up the Protocol Management Crisis (PMC) as a mechanism
to anticipate the effect of crisis in Europe. Formation of this PMC deserved
apperception as a form of caution of the two authorities by the time crisis had
to be encountered directly of indirectly.
Although the impact was still at
minimum, the weak economy caused by debt crisis in Europe was gradually
touching Indonesia. This was felt with the downturning demand for export goods.
In Aril 2012 last, Indonesia’s export value slumped by 3.3% against April 2011
although in January - April 2012 it still rose by 4.1% against same period last
year.
The downturning export performance
through the period of January-April 2012 was due to downtirning demand by
Indonesia’s main trade partners as buyers of non oil-gas products like Japan,
the USA, Singapore, Malaysia, South Korea and Thailand.
Among the many ways of the
Government to strengthen economic resilience in the trading sector was to
develop upstreaming industry such as mining. Therefore the Government
restricted export of raw mining materials by imposing 20% export tax. The
upstraming industry policy was among the Domestic Obligation (DMO) policies to
ensure availability of raw materials for the domestic industry. The strategy
was meant to promote people’s welfare through increasing employment opportunities.
In this case the Ministry of Trade
had given their full support to the nation’s upstreaming process: among them
was the revision on stipulations for certain mining products (Law no. 4/2009)
which made it mandatory for export not in the form of raw material preparation
of database of exporters and revision of export stipulations for tin bars,
stipulations for export of fertilizers and delegation of authority in signing
export permit through UPP.
As known, Indonesia’s total export
in April 2012 reached USD 15.98 billions, down by 3.3% compared to April 2011.
This included export of oil-gas USD 3.36 billion (up by 9.8%) and export of non
oil-gas USD 12,62 billion (down by 2.4%) while total export of January-April
2012 reached USD 64.5 billion, up by 4.1% including export of oil-gas USD 13,3
billion (up by 12.0%) and export of non oil-gas USD 51.2 billion (up by 2.3%).
To keep export from dropping was
important to keep Rupiah from sinking too deeply and to keep the position of
forex reserves stable although Bank Indonesia was forced to continuously make
intervention on the moneymarket.
To uphold discipline among exporters
in paying up their export proceeds to domestic banks, in accordance with
Regulations of Bank Indonesia (PBI) exporters were obliged to receive all
Export Yield Forex (DHE) through the Indonesia Forex Bank in not longer than 90
days after date of xport Notification of Goods (PEB) or else exporters would be
sanctioned.
In PBI no. 13/20/PBI/2011
particularly for PEB issued in 2012, DHE must be received by exporters through
domestic forex banks not later than 6 (six) months after PEB date. Hence DHE of
PEB per January 2012 should have been received 6 months in July 2012. As known,
based on monitoring, so far there were still exporters who did not receive
their DHE through domestic forex banks.
As the sanctions on violations would
be put on July 2, 2012, by next July exporters had the potential to have
administrative sanctions i.e. 0.5% of the nominal DHE which was not received
through local forex banks, the minimum fine being Rp 10,000,000 and the maximum
fine being Rp 100,000,000.00.
Exporters who failed to pay the said
administrative fine would be sanctioned by way of suspension of export services
by the Directorate General of Taxation. To ensure that the policy would be
effective in tems of implementation BI had launched illumination Campaign to
exporters and related institutions in many regions in Indonesia and continued
to run monitoring over application of the rules by exporters.
In regard to the above, exporters
were reminded to immediately receive their DHE through the domestic forex bank
before the set deadline. BI also assured that this regulation did not restrict
exporters in the freedom to use their DHE. Exporters were not obliged to
convert their DHE into Rupiah and were not forced to deposit their DHE in
domestic forex banks for any given period.
The turbulence which was felt in the
domestic monymarket and stockmarket must be well observed moneymarket and
stockmarket must be well observed and anticipative steps must be taken to
prevent the effect from expanding and wider which might hindrance further
economic growth. The monetary authority or fiscal authority must be able to
send positive signals in the eyes of market players to keep them form being
nervous and stay strongly confident.
Not less important in this uncertain
economic atmosphere caused by the crisis factor in Europe was that for the
short term related financial authorities that for the short term related
financial authorities that for the short term related financial authorities
refrained from making anti-market policies which would but create negative
sentiments. The must be underscored because there could be intuitive acts by
leaders who tend to adopt new unproductive policies which were probably not
urgent.
This warning was necessary because
lately controversy often break out among stakeholders about Government’s policy
which were not synchronous as indicated by overlapping or contradicting
regulations issued by ministries. Lack of coordination, harmony, and synergy
among ministries would create negative perceptions which were disadvantageous
to the nation’s future economy.
Business News - June 27, 2012
