Govt Launches 16th Economic Policy Package
Date 17 November 2018
Governor of Bank Indonesia Perry Warjiyo said that the announcement of the 16th Economic Policy Package (PKE) is a manifestation of concrete cooperative measures taken by the Government, the Financial Services Authority (OJK) and related institutions in order to improve economic security, to maintain macroeconomic stability as well as financial system, and also to encourage economic growth.
We have done a number of policy coordination activities including the steps taken by the Government as well as several B20 (biodiesel 20) programs and others, Perry said at a press conference at the Presidential Office, Jakarta, Friday (16/11).
With these policies, Perry continued, it would further strengthen economic security, including balance of payment. These policies will increase our foreign investment and also domestic production and therefore will be able to reduce imports, he added.
According to the Governor, the balance of payment will not only reduce the current account deficit, but also increase capital account surplus. The steps taken so far have improved international confidence and there has been a capital inflow in portfolio investment which until November has reached Rp42.6 trillion in the form of securities and others.
These policies will increase the capital account surplus and at the same time reduce imports as well as increase domestic production and thus, the current account deficit can be reduced.
Regarding Incentives for Export Earnings (DHE) policy, according to Perry, it needs to be emphasized that the policies adopted are consistent with Law Number 24 of 1999 on Foreign Exchange Activities. Ease of bringing in foreign exchange and exchanging it in rupiah as well as providing incentives, Perry added.
Furthermore, the Governor also explained that a new Bank Indonesia regulation on special savings accounts is going to be issued in order to facilitate tax incentives. The special savings accounts can be in the form of personal account or virtual account, Perry said.
So far, the Bank Indonesia has already regulated that the DHE enters the domestic banking sector at approximately 90 percent, but only 15 percent of the amount is exchanged to rupiah, the Governor said.
With these policies, Perry continued, it will further increase the incoming foreign exchange and its conversion to Rupiah.
He also added that the special savings and tax incentives will provide clarity and incentive provision in line with the 1999 Foreign Exchange Law.
In the meantime, Deputy Commissioner of the OJK Nurhaida said that the 16th PKE aims to improve the confidence and to attract investors. Investment in Indonesia can be in form of foreign direct investment or portfolio investment. Portfolio investment is part of financial services sector, Nurhaida said.
The OJK, Nurhaida continued, monitors the development of investor confidence in the market that starts to increase. If we look at the stock market in the first semester of 2018, the foreign investment or net buy is still increasing, whereas foreign purchases are still net sell, she said, adding that at the beginning of the second semester there has been a net buy and it can serve as an indication that foreign investors confidence is increasing.
The confidence is that what we need. Some of the industries that have been given the expansion of both tax holiday and the DNI (Negative Investment List) are companies/industries that also exist in our capital markets, Nurhaida said, adding the example of the industries are including basic chemical, stainless, and steel industry.
Therefore, we at the OJK will review on things we can do to increase investors confidence further in our financial services sector, Nurhaida concluded. (MAY/FID/EN)
Translated by: Galuh Wicaksono
Edited by: Mia Medyana