Indonesia Plans Economic Policy Moves to Cope With Global Uncertainties
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Indonesia will announce economic policy changes in coming months to help its industries cope with rising global uncertainty and the indirect impact of trade tensions between China and the United States, officials said.
Details about the moves, to be taken at a time Indonesia is trying to stabilize the fragile rupiah and reduce its current account deficit, have not been released.
Industry Minister Airlangga Hartarto said the government is preparing measures to improve the investment climate.
According to an official statement late on Monday (09/07), Airlangga said the government will “optimize the use of fiscal tools in the form of import and export taxes, as well as harmonizing import taxes, so that industries would have their competitive edge and are able to export.”
He said the government would also give more incentives to exports, including by subsidizing timber legality verification for small and medium furniture makers, providing them certificates for foreign buyers that ensure timber products are not sourced from illegal logging.
Companies would also be expected to reduce the use of imported materials in their production, the industry minister said.
Bank Indonesia governor Perry Warjiyo said authorities are preparing policies aimed at reducing the current account deficit.
Earlier on Monday, Perry warned that rising US-China tensions could hurt other economies not only through trade, but also financial channels as these could heighten investors’ risk aversion.
Questions & Answers
Q.What specific fiscal tools will the Indonesian government use to support industries?
What specific fiscal tools will the Indonesian government use to support industries?
The government intends to optimize fiscal tools by adjusting import and export taxes, and harmonizing import taxes. This is aimed at boosting industries' competitive edge and export capabilities.
Q.How will the government support small and medium furniture makers to boost their exports?
How will the government support small and medium furniture makers to boost their exports?
The government will subsidize timber legality verification for these furniture makers. This provides them with certificates for foreign buyers, ensuring their timber products come from legal sources.
Q.What is the broader economic goal of these upcoming policy changes?
What is the broader economic goal of these upcoming policy changes?
Indonesia aims to help its industries cope with increasing global uncertainty and the indirect effects of US-China trade tensions. It also seeks to stabilize the rupiah and reduce the current account deficit.
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