Gus Dur denies plan on capital controls<\/p>\n
JAKARTA (JP): President Abdurrahman Wahid dismissed on Monday
\nspeculation that the government was considering imposing capital
\ncontrols to help strengthen the ailing rupiah.<\/p>\n
Abdurrahman (Gus Dur) said that the government's plan to
\nreinforce the existing ruling on foreign exchange monitoring had
\nbeen misinterpreted.<\/p>\n
\"I said no. What we want is to have people register (report)
\nat the central bank whenever they bring a certain amount of money
\noverseas,\" he told a media conference following a breakfast
\nmeeting with visiting International Monetary Fund (IMF) managing
\ndirector Horst Koehler.<\/p>\n
He said the existing regulation on the requirement for
\nIndonesian citizens to report to the central bank whenever they
\ntraveled overseas bringing more than Rp 5 million in cash had not
\nbeen properly applied.<\/p>\n
Koehler also said at a separate media conference that
\nIndonesia would not impose capital controls.<\/p>\n
\"The President and I fully agreed that the introduction of
\ncapital controls would be counter-productive,\" Koehler said.<\/p>\n
He explained that imposing capital controls would not help
\nstrengthen the rupiah, but would even further weaken the local
\nunit because it would deter foreign investors and hinder the
\nsustained economic recovery.<\/p>\n
The comments made by Abdurrahman and Koehler ended days of
\nspeculation that the government was planning to implement capital
\ncontrols to help shore up the beleaguered rupiah.<\/p>\n
Media reports said last week that the President had asked his
\nsenior economics ministers to study the possibility of imposing
\nsome form of capital control, including measures to force the
\ncountry's exporters to park their earnings at home rather than
\noverseas.<\/p>\n
Asked if the IMF would support the repatriation of the
\ncountry's export earnings, Koehler said: \"The government has said
\nthat it's not going to impose capital controls. That's it.\"<\/p>\n
Rumors about the capital control plans helped strengthen the
\nrupiah last week, which closed at Rp 8,385 per U.S. dollar on
\nFriday, compared to Rp 8,630 on Wednesday. But the local stock
\nmarket was hit by the plan.<\/p>\n
The rupiah weakened again to Rp 8,445 on Monday after
\nAbdurrahman denied the capital control plans, but the Jakarta
\nStock Exchange gained 2.1 percent with the Composite Index
\nclosing at 453.94.<\/p>\n
The local currency has been under strong pressure over the
\npast few months due to a combination of domestic political
\nuncertainty and slow progress with the country's economic reform
\nprogram.<\/p>\n
The current state budget assumes an exchange rate of Rp 7,000
\nper dollar.<\/p>\n
Koehler reiterated that the key to strengthening the local
\ncurrency was a \"steady\" and \"transparent\" implementation of the
\neconomic reform program, not imposing capital controls.<\/p>\n
\"Strong and forceful implementation of the economic reform
\nprogram will no doubt strengthen the rupiah,\" he said.<\/p>\n
Koehler was on a one-day visit to Jakarta, after making
\nsimilar trips to China, Thailand and South Korea. His last visit
\nof his five-nation Asian tour will be to India.<\/p>\n
\"I've come here to also personally reconfirm and reassure that
\nwe are here to support and to help, not to lecture or impose.
\nBut, of course, we will give frank advice,\" Koehler said.<\/p>\n
He said that the approval on June 2 by the IMF executive board
\nto disburse some US$372 million in a loan to Indonesia showed the
\nfund's commitment to supporting the country's economic reform
\nprogram.<\/p>\n
The second loan disbursement was part of the total $5 billion
\npromised by the fund in January to Abdurrahman's administration.<\/p>\n
Koehler said that he had received the full commitment of the
\nPresident, Vice President Megawati Soekarnoputri and House of
\nRepresentatives Speaker Akbar Tandjung to implement the economic
\nreform program.<\/p>\n
The President told him would closely monitor the
\nimplementation of the reform program, he said.<\/p>\n
Koehler said that the IMF was confident that the country would
\nbe able to achieve its 4 percent economic growth target this
\nyear.<\/p>\n
\"Of course that is not enough to solve all the huge problems
\nin the country, but it is a good starting point,\" he said.<\/p>\n
Koehler also said that he and Abdurrahman agreed that there
\nwas a need to revitalize the Indonesian Bank Restructuring Agency
\n(IBRA) to allow it to speed up the disposal of the agency's large
\nassets and the restructuring of banks and indebted enterprises.
\n(rei\/cst)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/gus-dur-denies-plan-on-capital-controls-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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