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RUPIAH WEAKENS OVER CONCERN ABOUT GLOBAL RECESSION

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The Indonesian currency fell 18 points, or 0.13 percent, to close at Rp14.053 per US dollar compared to Rp14.035 earlier.

Greatindonesia.co.id, Jakarta – The rupiah weakened against the US dollar in the Jakarta interbank market on Tuesday evening over fears of a global economic recession.

The Indonesian currency fell 18 points, or 0.13 percent, to close at Rp14.053 per US dollar compared to Rp14.035 earlier.

“The market still has doubts about it and is waiting for certainty about the monetary policy from the meeting of the European Central Bank (ECB) that will be made known Thursday,” PT Garuda Berjangka President Director Ibrahim Assuaibi said in Jakarta Tuesday.

The ECB is expected to slash the deposit interest rate and offer stimulus including the buyback of bonds.

As reported earlier, factories in the European zone particularly Germany are struggling to withstand growth slowdown as a result of the US-China trade war. Hence, ECB President Mario Dragh will not remain silent from attempts to stabilize the European economy.

On the internal side, if the market remains volatile as a result of the trade war and Brexit, the central bank will again intervene in the market through a monetary policy mix to make the market attractive, Ibrahim believed.

“Looking ahead, BI (Bank Indonesia) and the government will continue to encourage the economy, take pre-emptive measures and be vigilant against the global condition and make a policy to facilitate foreign investment in the country,” he said.

The rupiah strengthened Rp14.030 against the US dollar Tuesday morning. Throughout the day, the rupiah hovered between Rp14.026 and Rp14.055. (ctr)

FINANCE

RUPIAH’S STRENGTHENING HAS YET TO IMPACT STATE BUDGET

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Finance Minister, Sri Mulyani Indrawati.

Greatindonesia.co.id, Jakarta – Finance Minister, Sri Mulyani Indrawati, stated that the Indonesian Rupiah’s appreciation against the US dollar has not had an impact on revenue in the state budget.

The Rupiah strengthened against the US dollar only in recent weeks, and its impact for a year cannot be looked at on a daily basis, she said at the parliament building here on Tuesday (14/1/2020).

“It is true that we will still look at its development and impact on the state budget in the past year and not on a daily basis,” she said.

The minister said the administration will still calculate it based on national and international economic developments to see the impact of the Rupiah’s strength on the national economy.

The rising state revenues were caused not only by the Rupiah’s low exchange rate against the US dollar but also by external factors, including the continuation of the US-China trade agreement, she said.

In addition, the government is still waiting for the reduction of the global interest rate which will allow for more capital inflows to Indonesia, she said.

“The low global interest rate will encourage capital inflows (to Indonesia),” she said.

The government is also alert over the widening current account deficit since the Rupiah’s strengthening will make the export value lower than the import value, she said

“We will also stay alert since we are still recording the current account deficit,” she said. (ant)

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INDONESIA’S ECONOMY STILL HEAVY IN 2020 : DEPUTY MINISTER

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Deputy Finance Minister, Suahasil Nazara.

Greatindonesia.co.id, Jakarta – Indonesia’s economy will find it hard to grow in 2020 because it cannot remain separate from the effects of the ongoing global turmoil, Deputy Finance Minister Suahasil Nazara projected. Although next year there will be general elections (elections) in the United States (US), it is not expected to reduce tension from global uncertainties that have taken place in recent years, Suahasil said.

“Next year there will be presidential elections in the US. We feel that whoever wins (the elections) will keep the tension in the US and China trade ties,” he said in Jakarta Monday.

The turmoil was not just an economic matter but a question of geopolitics between two countries, according to Suahasil. The US did not want China to develop faster, he believed.

“The trade tension is more than just an economic matter, it is about geopolitics, where the US does not want China to progress too fast. Therefore, that global tension will remain,” he noted.

He also hoped that the Japanese economy, which was currently quite strong with Gross Domestic Product (GDP) growing 1.8 percent annually in the third quarter of 2019 from the previous quarter, would continue to be stable so Indonesia’s export sector could rise.

“We hope Japan will recover, but of course there are risks. If China remains in a challenging situation, Europe will not recover, Britain will still be in a position to ascertain how it has passed through Brexit credibly,” Suahasil said.

The turmoil in various countries is putting a cloud over Indonesia’s economic conditions so the government will continue to reform, including through the establishment of an Omnibus Law related to Employment Creation and Taxation.

“The Omnibus Law aims to handle several laws which are considered to hamper investment. Through it we will address problems related to the Negative Investment List, labor reforms, EoDB, special economic zone, and land acquisition,” Suahasil said in conclusion. (ant)

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BI CUTS ITS OUTLOOK FOR LOAN GROWTH TO EIGHT PERCENT

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BI Governor, Perry Warjiyo.

Greatindonesia.co.id, Jakarta – Bank Indonesia (BI) has significantly reduced its outlook for loan growth to eight percent, from the previous range of 10-12 percent.

BI Governor Perry Warjiyo, told a press conference in Jakarta on Thursday (21/11/2019) that the demand for bank credit by November 2019 was still on the decline, even though the liquidity in banks was sufficient.

Therefore, the Central Bank tried to be realistic by cutting 200 basis points (two percent) for the growth outlook of bank credit to eight percent as the realization of credit growth reached 12.1 percent in 2018, the governor remarked.

“The Board of Governors discussed factors affecting credit growth. This is due to the low demand for credit from the corporate side,” he said.

The decline in this projection also cannot be separated from the realization of credit growth until September 2019. In the ninth months of this year, credit growth slowed to 7.89 percent yoy compared to August 2019, when it was 8.59 percent.

The slow growth of credit is in line with third party funds (DPK) in September 2019, which only grew 7.47 percent yoy or slowed down compared to the August 2019 growth of 7.62 percent yoy.

That way, until November 2019, the Central Bank’s latest projections show credit growth in 2019 at eight percent yoy, while third party funds (DPK) grew eight percent yoy.

Regarding the cause of the slow growth of credit, Warjiyo said there was no problem in terms of the supply of banking liquidity. But he acknowledged that in terms of supply, the distribution of liquidity was not evenly distributed in the Commercial Banks Group of Business Activities (BUKU) I, BUKU II, and BUKU III.

He said the slow pace of demand for credit was the main cause for the slow realization of lending.

Some indicators that illustrate the slow pace of credit demand were the Central Bank survey of the business world which concluded that 53 percent of corporate respondents have not planned their investments for 2020 because they are still struggling with company consolidation.

“Another indicator is the decline in imports of capital goods and raw materials. The condition shows that production activities have not grown rapidly,” he said.

In addition, the Central Bank also saw a shift in funding sources. Corporations are now starting to rely heavily on funding sources from the capital market by issuing bonds.

Based on these indicators, BI concluded that credit demand did not yet support the function of banking intermediation.

The projection from BI for credit growth shows the lowest picture for the performance of banking intermediation.

The Financial Services Authority is still setting a credit growth projection at 8-10 percent, based on a presentation during a meeting with the Commission XI on Monday earlier this week.

The Indonesia Deposit Insurance Corporation (LPS) projects that credit growth can still reach 10 percent this year. (ant)

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