Indonesia denies plan to control export earnings<\/p>\n
MANILA (Dow Jones): The Indonesian government is still
\nstudying a plan that could force exporters to repatriate their
\nforeign exchange earnings, Coordinating Minister for Economy,
\nFinance and Industry Ginandjar Kartasasmita said Wednesday.<\/p>\n
Speaking on the sidelines of a meeting of trade ministers from
\nthe Association of South East Asian Nations, Ginandjar said the
\nplan was an "attractive option," but said that the government was
\nalso looking at others.<\/p>\n
The minister stressed that such a move wouldn't be a form of
\ncapital control.<\/p>\n
Ginandjar said the government wasn't under pressure to quickly
\nimplement such a scheme. "We're not in a hurry and are not
\nclosing the door on other options," he said.<\/p>\n
"It should not be interpreted that we are going back to
\ncontrols...that is out of the question," he said.<\/p>\n
"We will continue to adhere to an open capital account,"
\nGinandjar added.<\/p>\n
Officials at the investment ministry said this week several
\nministries -- including investment, economics and finance -- were
\nconsidering a plan under which exporters would have to repatriate
\ntheir foreign exchange income at park it either at the central
\nbank or other Indonesian banks.<\/p>\n
The officials stressed that this didn't constitute a foreign-
\nexchange control, noting that the exporters would be free to
\nwithdraw their funds at any time. Analysts question this,
\nhowever.<\/p>\n
The Indonesian rupiah has strengthened to levels not seen
\nsince early May on the back of the speculation.<\/p>\n
The rupiah was trading at Rp 9,500 in the afternoon Wednesday
\nin the spot market, a level not seen since before the riots
\nleading to the fall of former president Soeharto shook Jakarta.<\/p>\n
The rupiah is higher than its close in Asian trading Tuesday
\nof Rp 10,000.<\/p>\n
The Indonesian currency is now trading below the government
\nand International Monetary Fund's year-end target of Rp 10,000
\nper dollar.<\/p>\n
Despite repeated government assurances that Indonesia will not
\nimplement sweeping Malaysian-style controls on capital movements,
\nmarket participants still speculate that the government is
\nplanning to peg the rupiah to the dollar. If it does so, they
\nsay, it will likely be at a level close to its year-end target.<\/p>\n
Ginandjar said the government was also looking at other models
\nto monitor capital flows, such as that adopted by Chile.<\/p>\n
"We are considering other concepts, for example in Chile where
\ncapital inflows and not outflows are controlled," he said. "They
\n(Chile) are trying to curb short-term capital inflows."<\/p>\n
Chile defied the international financial community when it
\ndevised a formula to try to insulate itself against collapsing
\neconomies around it by placing restrictions on the inflows of
\ncapital. The country has won grudging acceptance from some
\nskeptics for its policy.<\/p>\n
Ratings agency IBCA recently said that exchange controls such
\nas those used by the Chilean government to discourage short-term
\nvolatile capital inflows may help to improve the structure of a
\ncountry's external obligations, making them less vulnerable to
\nsudden shifts in investor sentiment.<\/p>\n
Bank Indonesia directors have previously admitted that they
\nwere studying the Chilean model to see whether it would be
\nsuitable for Indonesia, also eager to monitor the flows of so-
\ncalled hot money in and out of the country.<\/p>\n
ASEAN ministers are expected to discuss the social costs of
\nunbridled capital movements at their two-day meeting in Manila.
\nGinandjar is also expected to raise the oft-mooted idea of using
\nregional currencies for regional trade, to lesson the bloc's
\nreliance on the U.S. dollar.<\/p>\n
Several of ASEAN's members are known to favor this payment
\nmechanism.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-denies-plan-to-control-export-earnings-1447893297",
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"sponsor": "Okusi Associates",
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