REPUBLIKA.CO.ID, JAKARTA - Government plans to rise debt to equity ratio (DER) in the calculation of taxes for private sector debts. Acting Head of Fiscal Policy Office at the Finance Ministry, Bambang Brodjonegoro said the policy aimed to reduce private debts and to maintain policy of Indonesia's macroeconomic stability.
"Overload of foreign debts will cause the currency mismatch and inable to pay," Brodjonegoro said on Sunday.
Similar situation happened in 1997 to 1998 when ratio of private sector debts to DER reached 300 percent. Many private entrepreneurs were forced to shut their business due to of foreign debts.
Currently, many entrepreneurs seduced by liquidity in foreign countries, low interest rates and exchange rate stability. However, the favorable situation could be bad suddenly.
In February 2013, private foreign debts increased to 127.092 billion USD or 1234.825 trillion IDR compared with 106.73 billion USD in 2011. Brodjonegoro said that ratio of private sector debt to gross domestic product (GDP) has now reached 30 percent. It has exceeded the ratio of government debt to GDP which only 23 percent.
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