MARKET DEVELOPMENT
Govt Will Rethink Regulations to Boost Exports, Industry Minister Says
Govt Will Rethink Regulations to Boost Exports, Industry Minister Says
10/09/2013 (Jakarta Globe) - In an effort to boost exports, the central government is ready to alter regulations to support businesses, a senior minister said.
Industry Minister M.S. Hidayat said both he and Finance Minister M. Chatib Basri were scheduled to have a meeting with dozens of large exporters this week. “We will ask them what type of regulations can be temporarily altered to support them,” Hidayat said in Jakarta on Monday.
“Today, the economic situation is not conducive, therefore it is important for both parties [government and exporters] to sit together and have a discussion,” he said.
Hidayat said the government would review which sectors deserved supporting regulations. These regulations may provide some leeway in tariffs, as not all exporters can directly improve Indonesia’s current account deficit. “Some exporters are using foreign currency to import raw materials,” Hidayat said.
Indonesia’s current account posted a record high deficit of $9.8 billion in the second quarter this year, marking the seventh straight quarter the account has remained in deficit. Meanwhile, the trade balance widened to $2.3 billion in July.
Such external imbalances have undermined Indonesia’s economy and weakened its currency, which until early this year was still supported by inflows from portfolio investors.
Some Indonesian companies that generate their revenue in dollars have not repatriated their dollar earnings into the domestic market — a move that partially contributed to the fall of the rupiah against the American dollar.
Offshore investors fled the country after the US Federal Reserve signaled in May that it may soon end its bond-buying program as the US economy is recovering faster than expected.
Finance Minister Chatib Basri said the Fed needs to better communicate changes in its policies due to the implications to the world economy, especially for emerging countries.
Chatib said the lack of details on the so-called tapering is hurting emerging economies. “The Federal Reserve should communicate how much they have planned to pull off [of its bond-buying program] so we can anticipate it.”
Should the Fed provide more information, Indonesia could ready its foreign exchange reserves as a buffer against further currency depreciation, the minister said.
Over the last two weeks, emerging market currencies have been severely hit as investors pulled out their money in anticipation that the Fed will taper its stimulus efforts. This comes after recent improvements in US economic data has prompted the Fed to begin reducing the $85 billion-per-month stimulus it injects into the economy in September.
Chatib said Indonesia, along with other emerging economies, conveyed its position on the issue at the recent G20 meeting in St. Petersburg, Russia.
“President Obama said he cannot act on the behalf of the Federal Reserve, but agreedon the need for consultation,” Chatib said.
Industry Minister M.S. Hidayat said both he and Finance Minister M. Chatib Basri were scheduled to have a meeting with dozens of large exporters this week. “We will ask them what type of regulations can be temporarily altered to support them,” Hidayat said in Jakarta on Monday.
“Today, the economic situation is not conducive, therefore it is important for both parties [government and exporters] to sit together and have a discussion,” he said.
Hidayat said the government would review which sectors deserved supporting regulations. These regulations may provide some leeway in tariffs, as not all exporters can directly improve Indonesia’s current account deficit. “Some exporters are using foreign currency to import raw materials,” Hidayat said.
Indonesia’s current account posted a record high deficit of $9.8 billion in the second quarter this year, marking the seventh straight quarter the account has remained in deficit. Meanwhile, the trade balance widened to $2.3 billion in July.
Such external imbalances have undermined Indonesia’s economy and weakened its currency, which until early this year was still supported by inflows from portfolio investors.
Some Indonesian companies that generate their revenue in dollars have not repatriated their dollar earnings into the domestic market — a move that partially contributed to the fall of the rupiah against the American dollar.
Offshore investors fled the country after the US Federal Reserve signaled in May that it may soon end its bond-buying program as the US economy is recovering faster than expected.
Finance Minister Chatib Basri said the Fed needs to better communicate changes in its policies due to the implications to the world economy, especially for emerging countries.
Chatib said the lack of details on the so-called tapering is hurting emerging economies. “The Federal Reserve should communicate how much they have planned to pull off [of its bond-buying program] so we can anticipate it.”
Should the Fed provide more information, Indonesia could ready its foreign exchange reserves as a buffer against further currency depreciation, the minister said.
Over the last two weeks, emerging market currencies have been severely hit as investors pulled out their money in anticipation that the Fed will taper its stimulus efforts. This comes after recent improvements in US economic data has prompted the Fed to begin reducing the $85 billion-per-month stimulus it injects into the economy in September.
Chatib said Indonesia, along with other emerging economies, conveyed its position on the issue at the recent G20 meeting in St. Petersburg, Russia.
“President Obama said he cannot act on the behalf of the Federal Reserve, but agreedon the need for consultation,” Chatib said.