REPUBLIKA.CO.ID, JAKARTA -- Coordinating Minister for Economy Darmin Nasution said the pressure on rupiah would not yet be over although it is relatively stable hovering in a narrow range of 14,500-14,600 per U.S. dollar. He said external pressure brought about by normalization policy of the U.S. Central Bank, the trade war threat and commodity price fall would still determine the rupiah condition.
"Don't ever think this would soon over. It could go through the next two to three years," Darmin said here on Friday.
In facing the pressure the one the government could do is to strengthen the economic fundamental by cutting current account deficit, Darmin said. According to him, the result would not come in short term to help stabilize rupiah against the U.S. dollar.
The government, therefore, will continue to redress the current account balance such as by issuing the 16th economic policy package in a bid to increase capital account surplus.
The policy package covers revision of the Investment Negative list (DNI), to draw foreign exchange in export earning to be kept in domestic banks and improvement of tax regulation. The objectives of the policy package is to draw investment by business players by utilizing the momentum of the return of foreign capital to Indonesia, he said.
"If short term capital does not come there would be nothing to counterbalance the deficit. But don't see that this would directly improve the current account balance as it would take years," he said.
Meanwhile, the Jakarta Association of Young Indonesian Business People (Hipmi Jaya) asked the government to review its decision relaxing the Negative Investment List (DNI) opening 54 business areas for new investment including by foreign investment. Under the previous DNI the 54 business areas are closed to foreign investment.
"We fear that the policy is potential to weaken the position of Indonesian micro, small and medium enterprises (UMKM)," general chairman of HIPMI Jaya Afifuddin Suhaeli Kalla said here on Friday.
Afi said UMKM is the backbone of the country's economy contributing 62.58 percent to the country's GDP. "Relaxation of DNI could result in sidelining of UMKM especially in sectors on which projects could be wholly owned by foreign investors," he added.
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