JAKARTA (TheInsiderStories) –Finance Minister Sri Mulyani Indrawati has called for united efforts among all business players and the government to strengthen Indonesian economy amid mounting global pressures caused by hawkish move of the Us Federal Reserve and the trade war being waged by US President Donald Trump.
Strongly felt in the emerging markets across the globe, the global pressures are hitting Indonesia through the weakening of rupiah exchange rate against the US dollars and the rising trend of its current account deficit.
“I believe that if there is united effort and good communication between the government and businessmen, Indonesia can tackle the current economic condition which is changing very fast,” Sri Mulyani said on Friday before the participants of a seminar on the role of businessmen in developing tax and monetary system that is fair, transparent, and accountable.
Addressing the seminar as a keynote speaker, the former managing director of the World Bank, said under current condition the government is trying to generate exports faster than the imports. “We’d like to invite all businessmen to participate in a concerted effort to strengthen our economy by increasing exports, import substitutions, and improve business climate to maintain capital inflow,” she said.
The seminar, which was organized by the Indonesian Businessmen Association (Apindo) and the Indonesian Chamber of Commerce and Industry (Kadin), was also addressed by Bank Indonesia’s (BI) Deputy Governor Dody Budi Waluyo, finance ministry’s Tax Director General Robert Pakpahan, finance ministry’s Customs and Excise Director General Heru Pambudi, finance ministry’s Fiscal Policy Agency Suahazil Nagara, and Apindo Chairman Haryadi Sukamdani.
Sri Mulyani said that in 2018 Indonesia is facing a condition which is different from two or three years ago. It is caused by among others the US normalization policy. “I came back to resume the position of finance minister in 2016. We closed the year 2017 with good performance. But in 2018 we’re facing a challenging global dynamics as indicated by the US normalization policy,” she said.
But she pointed out that Indonesia is known by other countries as having positive economic foundation. The global business players still believe in Indonesian economy, which is growing strongly with lower inflation, lower deficit of state budget, and the government’s strong commitment to continually reform. “Therefore, in order to make it our concerted effort, I’d like to ask all business players to express their high optimism on Indonesian economy,” she said.
Regarding the global pressures, Apindo Chairman Hariyadi Sukamdani concurred with the finance minister, saying that such condition has affected businesses. “It’s been indicated by the weakening of rupiah against the US dollar, and the trend of state protection against imports that may affect the exports, and rising trend of cost increase at local market,” he said.
Sukamdani called on businessmen to be strongly committed to keeping the rupiah exchange rate. “Businessmen doing businesses in Indonesia should help maintain the rupiah. But the government should create a conducive condition by applying policies that will increase the efficiency of our economy,” he said.
Based on BI data, the current account deficit reached US$13,7 billion during the first semester 2018. It is predicted to reach US$25 billion by the end of this year. The import growth that reached 24.5 percent until July 2018 (year-to-date), which was higher than exports’ growth at 11,4 percent during the same period, was one main factors that caused the current account deficit.
The current account deficit has been rising during the last two years. In 2016 it was US$17 billion, and in 2017 it reached US$17.3 billion. The deficit had been compensated with the capital and financial transaction values at US$29 billion during 2016 and 2017.
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