Jakarta, May 9 (Antara) - The government and the people, especially businesses, should be able to take advantage of the rupiah depreciation that has been taking place in the past few weeks.
Despite its risky impact, the weakening of rupiah also has positive effects, which offers advantage for exports by increasing the competitive edge of local products in the global market.
For the first time since December 2015, the rupiah broke the psychological level of Rp14 thousand per dollar on Monday. It traded at Rp14,003 per dollar in the spot market. The Jakarta Interbank Spot Dollar Rate announced by Bank Indonesia (BI/the central bank) on Tuesday showed that the rupiah weakened to Rp14,036 per dollar.
The rupiah fell again by 50 points to trade at Rp14,043 per dollar in the interbank spot market on Tuesday afternoon from the previous Rp13,993.
It fell 30 points to Rp14,073 per dollar in the Jakarta interbank spot market on Wednesday morning after it closed at Rp14,043 per dollar earlier.
Although it has positive impact on exports, the weakening of rupiah should continue to be monitored as it also increases the burden of subsidies, import costs, and inflation.
According to Finance Minister Sri Mulyani, Indonesia should monitor the impact of the rupiah deprecation on imported inflation.
"Indonesia has carried out a lot of imports since last year until the first quarter of this year," Mulayan stated on Tuesday night (May 8). Import growth reaches 12.75 percent of the Gross Domestic Product (GDP) in the first quarter of 2018 as compared to that in the same period last year.
Therefore, the government, according to Mulyani, will continue to monitor the rupiah depreciation dynamism, particularly from the aspect of other countries' policies, which have impact on the exchange rate of the rupiah and the national economy.
"The current condition should continue to be watched and cultivated to capitalize on the positive advantages of depreciation," she noted.
The finance minister is of the opinion that the rupiah depreciation has positive impact on the state budget as it would increase our receipts from the dollar currency. "However, we should remember that we have responsibilities to be met and considered, such as the fiscal deficit that should be maintained at 2.19 percent of the GDP, or even lower," Mulyani remarked.
According to the head of the Finance Ministry's Fiscal Policy Department of the Ministry of Finance, Suahasil Nazara Nazara, the weakening of the rupiah is yet to affect the management of the state budget.
"There is nothing worrisome with regard to the management of the budget," Nazara noted in Jakarta on Tuesday. The current depreciation of the rupiah has exceeded the assumption set in the 2018 State Budget (APBN) at Rp13,400 per US dollar. Yet, this condition has both positive and negative implications.
"Its positive effect on receipts is still higher than its negative effect on spending," Nazara pointed out.
One of the biggest impacts is an increase in the burden of subsidies and interest payments on debt, although additional revenue is expected from the strengthening of the US dollar.
"The burden related to the exchange rate is in the subsidy, as we buy the (subsidized oil) from abroad. It is also related to the interest payment and the installments of principles and interest of debts," he explained.
Mulyani acknowledged that the rupiah deprecation will affect the subsidy budget, particularly subsidies for oil and electricity. Hence, Mulyani will discuss the matter with Energy and Mineral Resources (ESDM) Minister Ignasius Jonan and State-owned Enterprises (SOE) Minister Rini Soemarno.
She also revealed that her side is currently doing a recalculation of the subsidy along with related ministries, agencies, and SOEs.
In the meantime, Vice President Jusuf Kalla has stated the weakening of the rupiah serves as a chance to produce more goods for exports. "On one hand, the prices of imported raw materials will increase, but the problem can be solved by encouraging people to produce (more) goods as a result of expensive imports," he remarked at the Vice Presidential Office in Jakarta on Tuesday (May 8).
The vice president added that the issue of the weakening rupiah is not caused by a single factor but is related to the global economy, particularly the US economy. "The issue of the rupiah does not stand alone. It depends largely on the global economy, particularly the US economy. Since the US economy is strengthening, the rupiah weakens," he revealed.
Therefore, the current rupiah depreciation is a good momentum for businesses to increase their exports. According to the Indonesian Chamber of Commerce and Industry (KADIN), it should become a momentum to encourage export and national logistics to improve its competitiveness.
"The impact of the rupiah depreciation against the US dollar would make exporters happy, but it would cause hardship to importers. There would be an increase in selling price as they import in dollar and sell in rupiah," Deputy Chairman of KADIN for trade, Benny Soetrisno, remarked.
He stated that as a response to the rupiah depreciation, KADIN would encourage its members to increase exports of non-oil and gas commodities and improve the logistics sector to compete with other exporters.***3***(A014/INE)EDITED BY INE
(T.A014/A/BESSR/A. Abdussalam) 09-05-2018 22:03: |
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