Indonesia unveals drastic measures to support rupiah

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jakarta cloudsIndonesia said on August 23 it would curb imports of luxury cars and introduce other drastic steps to support its weakening currency and rein in the outflow of funds.

Indonesia, along with Malaysia and Thailand, has been hit hard by an exodus of cash from its financial markets as improving economic prospects in the US and Europe have reversed global money flow.

Coordinating Minister for the Economy Hatta Rajasa said the government will also relax mineral export quotas and streamline the investment permit process. It will increase the import tax on luxury cars, private planes and yachts and some branded products, provide tax incentives for investment in agriculture and metal industries and seek to reduce oil imports.

The emergency fiscal package came as Indonesia faces threats on multiple fronts, from rising inflation to falling demand and prices for its top exports such as coal, tin and palm oil. Foreign direct investment is falling as has Chinese demand for the country’s commodities.

The country’s current account was near a record deficit of $9.8 billion in the second quarter of 2013. The rupiah sunk to its lowest level in over four years on August 23, trading at 10,902 per US dollar. The annual inflation rate could exceed 8.9 per cent in August, the highest since January 2009.

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Reading Time: 1 minute

Indonesia said on August 23 it would curb imports of luxury cars and introduce other drastic steps to support its weakening currency and rein in the outflow of funds.

Reading Time: 1 minute

jakarta cloudsIndonesia said on August 23 it would curb imports of luxury cars and introduce other drastic steps to support its weakening currency and rein in the outflow of funds.

Indonesia, along with Malaysia and Thailand, has been hit hard by an exodus of cash from its financial markets as improving economic prospects in the US and Europe have reversed global money flow.

Coordinating Minister for the Economy Hatta Rajasa said the government will also relax mineral export quotas and streamline the investment permit process. It will increase the import tax on luxury cars, private planes and yachts and some branded products, provide tax incentives for investment in agriculture and metal industries and seek to reduce oil imports.

The emergency fiscal package came as Indonesia faces threats on multiple fronts, from rising inflation to falling demand and prices for its top exports such as coal, tin and palm oil. Foreign direct investment is falling as has Chinese demand for the country’s commodities.

The country’s current account was near a record deficit of $9.8 billion in the second quarter of 2013. The rupiah sunk to its lowest level in over four years on August 23, trading at 10,902 per US dollar. The annual inflation rate could exceed 8.9 per cent in August, the highest since January 2009.

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