Monday , August 2 2021

Maintain rupee stability through economic policy scenarios (+ video)

Jakarta (Anta) – The government has introduced the XVI Economic Policy Package to attract foreign capital and investment in Indonesia.

The Sixteenth Economic Policy Package, which includes the relaxation of business sectors in the negative investment list (DNI), is one of the purposes, aimed at simplifying investment licensing in the country and supporting the rupee.

25 out of 54 business sectors have been excluded from the DNI, which can be increased by up to 100% by foreign capital. 25 business sectors include oil and gas construction services, ocean oil and gas drilling services, internet and telephone services, pharmaceutical industry and polling or surveying services.

Observers can evaluate the exemption of the DNI for the production of new products for the export market, so that in the future, the role of Indonesian exports can be increased.

So far, Indonesia's export growth has slowed down, so the value of the import exceeds the export value.

This is the factor that depreciates rupees against the US dollar. Therefore, the strategy of maintaining rupee fluctuation increases exports so that the current account deficit (CAD) will decrease.

Bank Woo Sodara Indonesia TBK Money Market Inspector Rule Novea said that export-oriented policies have a good multiplier effect to advance to the national economy.

"Growing exports can improve CAD, the impact of rupee's exchange rate stability on foreign currencies, especially the US dollar, can be well maintained," he said.

They are optimistic that the VXI policy package can encourage export-oriented businesses to stop further, which eventually contributes a lot to the improvement of CAD and enhances foreign exchange liquidity in the country.

"CAD does not have a short-term impact, but it's a positive effort from the government," he said.

Investor Trust

Prime Minister of Economic Affairs Minister Dermin Nasution said that the purpose of the XVI Economic Policy Package is to encourage the entry of foreign direct investment so that the current account deficit is reduced.

"We want to encourage and continue investor confidence in the economy of Indonesia," says Mr Nirmushan.

Despite the exit from the beginning of the year, in the beginning of November 2018, the government securities (SBN) has flown foreign capital in Indonesia, which reached RP 14.4 trillion, so in the meanwhile, the IDR reached 42.6 trillion between January-November 2018.

According to this capital inflows in Indonesia, it shows that foreign investors have high confidence in Indonesia's economic position.
The government wants to encourage more foreign capital, including direct investment, using the momentum to boost confidence of foreign investors.

Increase in direct investment is expected to increase the increase in Current Transaction Deficit (CAD). In addition, the government expects the investor confidence to rise in the short term.

Save foreign exchange

Rule Nova expects that the government can encourage entrepreneurs to save their exports to foreign exchange so that the exchange rate stability of rupee can be better maintained in better economic sentiment, which is not comfortable.

He said, the US. The generalization of the central bank's policy is that the role of industrialists in maintaining the position of rupee between external pressure and trade threat threats is still very high, which is still slowing down.

Meanwhile, Chief Economist Temple Securitas, Leo Renalidi said that foreign currency changes can be even greater from exports to rupees, if the non-distributed forward transaction (domestic NDF / DNDF) in the domestic market can reduce hedging costs in the medium term.

"Leo Renaldy said," The bank reduces the pressure of Indonesia as the sole supplier of foreign exchange liquidity in the country. "

Last September, 2018, Bank Indonesia provided provisions related to DNDP transactions to support efforts to improve rupee exchange rate stability, accelerate the rise in domestic foreign exchange market and reduce the risk of rupee exchange rate.

The purpose of issuing this provision is to provide alternative options for alternative actors, including exporters in hedging local overseas exchange market, existing hedging equipment is complementary.

The XVI Volume Economic Policy package is believed to be seen in optical scenario, so that it will have a positive impact on the national economy in the future. *

Read also: XVI urged to enter "tax holiday" in the economic policy package

Read also: Complaints about the pros and cons of a negative investment listing

Puverta: Zubi Mahrophi
Editor: Araasan Saptiyulsa AS
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