President Joko Widodo lead a Limited Meeting on Forex Exchange Revenues at the President Office on Tuesday (14/08)

JAKARTA (TheInsiderStories)Indonesian government will stop importing 500 items for six months in order to stabilise Rupiah against US dollar. Government also considered to give an incentive for exporters to bring their revenues to the country.

Finance Minister Sri Mulyani Indrawati on Tuesday (14/8) said the government will soon release the lists of over than 500 items imported products. This policy is expected to ease pressure on the current account deficit that reached 3 percent of gross domestic product (GDP) in the second quarter of this year.

Indrawati said Indonesia recorded high imports of consumers goods, raw materials, and capital goods, especially in the second quarter of this year. This condition makes the government pay more attention to reduce imports.

“I convey it in the cabinet [meeting] that some commodities contribute to high import will be stopped, postponed,” she said.

The minister also said the policy to stop imports is prioritized for capital goods imported by the government and state-owned companies. In addition, she added, the government will reduce import for infrastructure projects so that the local components will increase.

According to her, the government will stop importing those 500 items for six months and will see the impact on the balance of payments.

Furthermore, Indrawati said that the government will control imported consumer goods that not strategic for Indonesia’s economy. “This includes online shopping from overseas which contributes to consumption, [we will] firmly controlling,” she added.

In addition to reducing import, she said the government committed to give incentives for industries in order to boost export.

CPO Mix

Meanwhile, Coordinating Minister for Economic Affairs Darmin Nasution said the government will accelerate the implementation of CPO mix up to 20 percent (B20) on subsidized and non-subsidized diesel fuel by September 1, 2018. He added that the government will launch a presidential regulation soon.

“[It will sign] tomorrow at the latest, so the Minister of Energy and Mineral Resources could follow up by issuing the derivative regulation,” he added.

This policy expected to reduce imported fuel with a foreign exchange saving up to US$2.3 billion by the end of this year. In addition, this policy will increase palm oil price amid threat of European Union ban.

Indonesia booked $89.04 billion in import in the first semester of this year, significantly higher than export at $88.2 billion. It made the country booked a trade balance deficit of $1.02 billion in the first semester of this year. This condition widened CAD and put more pressure on the rupiah exchange rate against the US dollar.

Email: fauzulmuna@theinsiderstories.com

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