Govt not yet able to deal with global turmoil

Dynamics of global finance put pressure on the rupiah exchange rate.

REPUBLIKA.CO.ID, JAKARTA — Coordinating Economic Affairs Minister Darmin Nasution said government policies prepared to deal with global dynamics were still unable to keep up with current conditions. He stressed the dynamics of global finance put pressure on the rupiah exchange rate in the past week.

Therefore, government continued to issue policies that could overcome these global pressures. One of the ways was by issuing policies to control the import of consumer goods.

"Actually, we have prepared to face such condition, but we must admitted that these steps cannot compensate for the speed of the movement," Darmin said on Wednesday (Sept 5).

One of the impacts of global pressure was an increase in the current account deficit (CAD). For information, the current account deficit in the second quarter of 2018 has increased due to an increase in domestic economic activity.

The current account deficit in the second quarter of 2018 was recorded at 8,0 billion US dollars or 3,0 percent of GDP. This was higher than the previous quarter's deficit of 5,7 billion US dollars or 2,2 percent of GDP.

To overcome this, government also tried to improve the trade balance deficit which reached 3 billion US dollar until last July, by boosting exports and suppressing imports. Darmin explained, deregulation policy packages aimed at encouraging investment and exports also had been issued.

In addition, government has also launched the Electronic Integrated Business Licensing system, also known as Online Single Submission (OSS). According to Darmin, OSS is a policy that designed from the beginning to provide investment facilities and encourage exports.

Government also sought to increase import substitution by launching the B20 program. This is projected to save foreign exchange of 2,3 billion US dollar. In addition, Darmin said Ministry of Energy and Mineral Resources is designing an additional coal export quota.

"If the two are joined and run, the trade balance can be completed by the end of the year,” Darmin added.

Not only efforts to reduce the trade balance deficit, government is also trying to improve CAD by supporting the tourism sector. One of the latest policies is the granting of Tourism Business Credit (KUR) Tourism.

Darmin expected that the financing assistance could encourage the development of tourism support facilities such as homestays, small restaurants, and souvenir centers. He said the policy to improve CAD was to improve sentiment towards Indonesia. He hopes, it can strengthen the rupiah exchange rate.

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