Greatindonesia.co.id, Jakarta – To accelerate national economic growth, Bank Indonesia (BI) has signaled that it will soon relax the macro-prudential policy which currently faces low export and investment growth as a result of the global economic downturn.
The support for the macro-prudential policy is aimed at encouraging production and exports from priority sectors such as manufacturing industry and tourism, BI Deputy Governor Dody Budi Waluyo said in Jakarta Monday (12/8/2019).
“From the standpoint of other policies, we still have the macro-prudential policy that we will continue to assess in the future. But I cannot say anything on that now,” he said.
He refused to divulge the details. However, the scope of the BI current policies, either monetary or macro-prudential, will be used to spur the economic growth on condition that the BI target of creating economic stability will not be disrupted.
Since 2018, when BI tightened benchmark interest rate policy, it loosened the macro-prudential policy to compensate the regime of benchmark interest rate hike of up to 1.75 percent to six percent. The policy included the relaxation of property down-payment or loan to value (LtV) and the loosening of the intermediary capability of banks through the macro-prudential intermediary ratio (RIM) increased to the upper limit of up to 94 percent. The policy was also aimed at encouraging the growth of bank credits.
BI also pledged a stimulus to boost the economy through the payment system policy by, among others, developing a technology-based financial industry (fintech) to facilitate transactions and public consumption.
Domestic economic growth should reach between 5.0 and 5.4 percent in 2019, BI has projected. (iaf)
INDONESIAN DIPLOMATS URGED TO HELP RESOLVE CURRENT ACCOUNT DEFICIT
Greatindonesia.co.id, Jakarta – Former Indonesian Ambassador to China, Sugeng Rahardjo, urged all the Indonesian diplomats around the world to help resolve a current account deficit by not letting themselves get trapped in a sectoral ego and protocol affairs during their overseas postings.
“Do not presume that an endeavor to increase trade cooperation is just the responsibility of the Trade Ministry, not the Ministry of Foreign Affairs (MoFA),” he said here on Monday when asked how to optimize the role of Indonesian diplomats.
According to Rahardjo, who was assigned as the Indonesian Ambassador to South Africa before heading the Indonesian Embassy in Beijing, there are at least four leading indicators for measuring the success of overseas Indonesian representative offices.
The leading indicators constantly enhance trade cooperation, with increased investment for both sides, as well as enjoy an improvement in the tourism sector and the transfer of technology. “These four leading indicators are enough,” he said.
In achieving these goals, adhering to the “free and active” foreign policy seems to have become an old story because what is more important in this 21st century is how we can assist the government to ensure the absence of a current account deficit in the future.
Trillions of rupiah that the government spends for financing some 140 overseas representative offices in five continents must get returned through economic and trade activities.
To this end, the Indonesian embassies should be responsive to the availability of trading opportunities.
“If trading opportunities are available but our embassies look passive because they think that trade-related matters are the Trade Ministry’s responsibility, I think it is definitely wrong because opportunities will not come twice,” he said.
He also deplored the dissolution of the directorate general of overseas economic cooperation at the Indonesian MoFA because this ministry holds political positions so that it now prioritizes the political and legal fields.
“When we have no enemies, the economic sector must play a role. So, if we pay people for just sitting in the overseas representative offices and doing nothing, this country will suffer losses,” he said.
Sugeng Rahardjo said when he headed the Indonesian Embassy in South Africa, he had helped sell 10,000 units of Avanza vans to be used as taxicabs during the 2010 World Cup in the country.
As a result of this, Astra’s automotive manufacture also saw a demand from South Africa. “If all Indonesian representative offices can do the same, I believe there will be no current account deficit,” he said.
During his ambassadorial posting in Beijing, he said he had put pressure on China to open its market for several Indonesian commodities that it had banned, including the edible bird’s nest, agarwood, arowana (Screlopages formosus), and mangosteen.
In the bird’s nest trade, Indonesia exported 70 tonnes of bird’s nest worth Rp4 trillion to China last year while its export quota was recorded at 150 tonnes, said Rahardjo, who is currently the President Director of publicly listed tire maker Gajah Tunggal Tbk.
He said he also resolved China’s imposition of tax worth US$5 million on Garuda Indonesia for 12 years. At that time, he questioned the Chinese Government on its tax policy on Garuda while it recognized Indonesia as its good friend.
He then “threatened” to adopt a reciprocal policy on China’s airlines serving flights to Indonesia.
“It is not too long to wait for China’s request for negotiating the tax issue, and it can be solved. It means that all problems can be resolved if we have a keenness and the goodwill to resolve them,” he said.
As a former Indonesia ambassador who had served the nation and the state’s interests for many years, Rahardjo urged the Indonesian diplomats to leave what he called the “Napoleon style” or feeling of being respected as the state’s envoys.
“Ideally, the state’s envoys must be down to earth. They must be able to gain maximum benefit from the availability of opportunities abroad for Indonesia,” he said. (atm)
IMF PRAISES STABLE ECONOMIC GROWTH IN INDONESIA : BI
Greatindonesia.co.id, Jakarta – The IMF praised the stable economic growth in Indonesia coupled with macroeconomic stability.
“The results of the economic assessment, as contained in the Article IV Consultations Report, were discussed previously at the IMF Executive Board Meeting in Washington D.C., United States, on July 3, 2019,” Executive director of Bank Indonesia’s communication department, Onny Widjanarko, said in a statement here, Thursday (1/8/2019).
Bank Indonesia has welcomed the latest assessment of Indonesia’s national economy conducted by the International Monetary Fund (IMF), which was delivered in the Article IV Consultations 1 released Friday (2/8/2019).
The IMF acknowledged that the policies instituted by Bank Indonesia, the Government and other relevant authorities have effectively mitigated the impact of external headwinds since the beginning of 2018, Widjanarko said.
The IMF’s Board of Directors commended the focus of the policy mix, which is oriented on supporting the stability of the macroeconomic and financial systems, safeguarding the buffers and overcoming vulnerabilities.
Furthermore, the Board of Directors expressed its appreciation over the ongoing efforts to improve infrastructure, streamline regulations, as well as to reform health care and education.
Moving forward, the IMF forecasts a promising economic outlook for Indonesia but emphasized the need to remain vigilant of the emerging risks, external in particular.
The IMF also reiterated the importance of continuing structural reforms, especially in terms of implementing the medium- to long-term revenue strategy, as well as deepening of the financial market, Widjanarko said.
The IMF’s positive stance is congruent with the results of Bank Indonesia’s own assessments, which have shown how economic resilience is improving in Indonesia.
In that context, the Governor of Bank Indonesia stated that the positive economic achievements made in Indonesia throughout 2018 and the first half of 2019 are inextricably linked to policy synergy and the commitment of Bank Indonesia, the Government and other relevant authorities in terms of building national economic growth momentum, as well as maintaining macroeconomic and financial system stability.
To that end, Bank Indonesia constantly optimizes its mix of monetary, macro prudential and payment system policies in order to maintain macroeconomic and financial system stability.
Meanwhile, the Government is currently reforming the tax structure in Indonesia and improving the quality of budget-spending with a focus on infrastructure projects, education and health care.
In addition, the Government and Bank Indonesia will continue structural reforms to enhance the investment climate, improve infrastructure and deepen the financial markets, Widjanarko said. (azi)
RUPIAH STRENGTHENS AS INVESTORS BRACE FOR FED’S ANNOUNCEMENT
Greatindonesia.co.id, Jakarta – The exchange rate of the rupiah transacted between banks in Jakarta on Wednesday afternoon strengthened, as investors awaited the US Federal Reserve’s (The Fed’s) key announcement of the monetary policy.
The Indonesian currency strengthened six points, or 0.04 percent, to Rp14,022 per US dollar, from the earlier Rp14,028 per US dollar.
“The market is in a wait and see mode and looks ahead to the outcome of the Federal Reserve meeting later in the day when policymakers are expected to cut interest rates for the first time since 2008,” PT Garuda Futures’ Managing Director Ibrahim Assuaibi noted here on Wednesday (31/7/2019).
With the market forecasting the Fed to cut interest rates by 25 basis points, Assuaibi noted that the main focus is whether the Fed will leave the door open for further policy easing in a bid to protect the world’s largest economy from slowing global growth and the impact of trade conflicts.
On the domestic front, the movement of the rupiah today was influenced by the Deposit Insurance Agency (LPS) Board of Commissioners’ meeting that decided to cut the interest rates on rupiah deposits in commercial banks by 25 basis points (bps), i.e., 6.75 percent, and in rural banks to 9.25 percent, while the guaranteed interest rate in foreign exchange at commercial banks remained at 2.25 percent.
Changes in the deposit guarantee interest rates are based on several factors including the banking interest rates being monitored at a stable level as well as potential to decline, conditions and risk of banking liquidity being relatively well-maintained amid the trend of rising deposit growth, and domestic financial system stability being monitored in accordance with easing volatility in financial markets.
The rupiah opened at Rp14,020 in the morning. During the day, the rupiah hovered in the range of Rp14,009 per US dollar to Rp14,028 per US dollar.
In the meantime, Bank Indonesia’s middle exchange rate on Wednesday showed that the rupiah strengthened to Rp14,026 per US dollar as compared to Rp14,034 per US dollar on the previous day. (ant)
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