Give exchange controls a chance<\/p>\n
I was amazed at your dismissal of the concept of exchange
\ncontrol (Editorial Aug. 5: Clutching at straws). You do not seem
\nto have any particular argument except that (a) exchange controls
\nwill affect private capital inflow (well there isn't any at the
\nmoment so things can't get any worse), (b) it will affect market
\nconfidence in the rupiah (please tell me exactly when, during the
\nlast 30 years, there has ever been \"market confidence\" in the
\nrupiah!) and (c) that exchange controls will fail because of
\ncorruption and manipulation (what an unbelievable excuse in this
\nera of reform).<\/p>\n
Exchange controls are not a long-term solution but have been
\nused successfully in the past by governments (from UK to NZ) as a
\ntool to give breathing space to a battered economy to allow
\nbusiness to get back to work and to encourage capital flow.<\/p>\n
Give it a chance for the next four to five years. Fix the
\nrupiah at Rp 3,600, watch interest rates tumble and then
\nconcentrate on the problems which existed before July 1997.<\/p>\n
By the way, I agree that the currency board proposal is
\nunfeasible, but this is because it was essentially a pegged rate
\nsystem (not fixed rate) without exchange controls and relied
\nheavily on foreign currency reserves and domestic interest rates
\nto stabilize the exchange rate.<\/p>\n
In simple terms it meant that Indonesia would be betting the
\ninheritance of its children against free market forces. The
\neconomic gurus already managed to waste US$15 billion, or half of
\nthe country's foreign reserves, last year. What Indonesia needs
\nnow is tough economic policy, not \"market confidence.\" It will be
\nunpopular with individuals and speculators but it will protect
\nthe worth of the nation for its children.<\/p>\n
JOHN SLACK<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/give-exchange-controls-a-chance-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }