JAKARTA (TheInsiderStories) – All businessmen under Indonesian Chamber of Commerce and Industry (ICCI) committed to bring 100 percent of foreign exchange revenues to the country, said the chairman on Wednesday (15/08). Currently, it is only around 85 percent of the revenues come back to the country.
“We agree that 100 percent of the revenues we get from the export should be put into domestic,” said Rosan Roeslani, ICCI’ chairman after attended closed meeting with economic ministers, the Financial Services Authority, and Bank Indonesia yesterday.
He also affirmed that the entrepreneurs would try to increase the percentage of foreign exchange revenues converted to Rupiah. Based on government data, currently there is only 15 percent or US$20 billion of funds that have been converted to Rupiah.
In yesterday meeting, Roeslani stated, that all the businessmen commited to conver up to 50 percent or around $80 billion of the foreign exchange revenues from exports to Rupiah.
The Rupiah weakening become Indonesian government concern amid the trade war and other international and domestic issues. In months, the local currency has dropped significantly and could hurt the domestic economy.
On July 26, President Joko Widodo invited ICCI, Association of Indonesian Entrepreneurs and conglomerates to Bogor Palace discussed the latest economic development in the country.
The number of national tycoons meet with Widodo including Djarum group owner Budi Hartono, owner of Rajawali Corpora Peter Sondakh, Boss Garuda Food Group Sudhamek AWS, President Director Adaro Energy Tbk Garibaldi Thohir, Owner of Medco Group Arifin Panigoro, and Wings Group Leader Eddy William Katuari.
“We are asked, these businessmen willing not to put the money in Indonesia exchange to Rupiah for currency strengthening. Certainly from the business world because of this for the good will we follow up,” he remarked after meeting with president Widodo at the Bogor Palace on July 26.
In the meeting, the President also discussed with the entrepreneurs how to increase investment in the archipelago and what are the constraints. Finance Minister Sri Mulyani Indrawati stated, that president encourages the entrepreneurs to stay focused on their business and increases their exports.
President stressed it with the competitiveness, the businessmen can overcome the strengthening of the dollar and at the same time use it to take it an opportunity, she said.
Recently, the government has announced eight strategies to counter the trade war imposed by the United States will eventually affect Indonesia. The United States government is reported evaluating the existence of a generalized system of preference (GSP) given to products from Indonesia.
Following a trade deficit with Indonesia, the United State’s President Donald Trump threatened to impose a 124th tariff on Indonesian products. In 2017, Indonesia booked $9.59 billion trade surplus with the US.
Senior Advisor to Indonesia’s Vice President Sofjan Wanandi said that a removal from the GSP list would cost Indonesian exporters at least $1.8 billion in additional tariffs.
Industry Minister Airlangga Hartarto said the Indonesian government has designed eight strategies to respond to the trade war threat. First is fiscal revenue optimization by applying export duties and import duties in order to improve industries competitiveness.
In addition, the government ensures the availability of raw materials and incentives for the industries to encourage exports. Furthermore, the government also will give incentives for industries seeking to relocate its factories from the labor-intensive area such as West Java to the other areas such as Central Java.
The government also commits to provide incentives for the small medium enterprises in furniture sectors to boost export, such as by subsidizing Timber Legality Verification System.
In addition, the government will improve the domestic content level for industrial utilization in order to meet the availability of raw materials including petrochemical and fuel corporations in Tuban, East Java.
Furthermore, the government will boost the using of biodiesel in order to increase the consumption of crude palm oil by 500,000 tons per year. Last, the government will maximize the tourism by developing low-cost carrier.
However, the strategies are more general in view of the nation’s persistent trade deficit and not specific measures to respond to the threat of trade war. Indonesia booked $2.83 billion in deficit trade balance from January to May 2018.