RI deems forex monitoring plan acceptable<\/p>\n
JAKARTA (JP): The International Monetary Fund (IMF) should
\nhave no reason to forbid Indonesia from implementing its proposed
\nforeign exchange monitoring system, the country's senior
\neconomics minister said on Monday.<\/p>\n
Coordinating Minister for Economy, Finance and Industry
\nGinandjar Kartasasmita said that every country had the right to
\nimplement its own foreign exchange system.<\/p>\n
\"I don't think there will be any problem with the IMF if its
\nabout the monitoring system, meaning that every country has the
\nright to implement its own system,\" he told reporters after
\nchairing a monthly meeting of economics ministers.<\/p>\n
The IMF is organizing a multibillion bailout in exchange for
\nIndonesia implementing a wide-ranging economic reform package to
\nhelp lift the country from its worst economic crisis in three
\ndecades. The value of the rupiah has plunged by more than 70
\npercent against the U.S. dollar from its pre-crisis level in July
\nlast year.<\/p>\n
The Fund is traditionally a staunch supporter of a free
\nforeign exchange system.<\/p>\n
IMF Asia Pacific director Hubert Neiss is expected to arrive
\nin Jakarta on Wednesday for a monthly review of the country's
\neconomic reform programs.<\/p>\n
\"I'll check with him (Neiss) if he has any problem with our
\nplan,\" Ginandjar said.<\/p>\n
He reiterated that Bank Indonesia was studying various
\nmechanisms to improve the monitoring of capital flows, including
\nthe model adopted by Chile where short-term capital inflows were
\ncontrolled.<\/p>\n
News that the government plans to introduce some form of
\ncapital control reemerged last week when Ginandjar was quoted by
\na newspaper as saying that the government was considering forcing
\nexporters to report their hard currency earnings to the
\nauthorities for monitoring purposes.<\/p>\n
Fears of the capital control helped the rupiah to strengthen
\nsignificantly to Rp 9,050 against the U.S. dollar last week, from
\nbetween 10,500 to Rp 11,000 in the previous weeks.<\/p>\n
In Semarang on Monday former finance minister Fuad Bawazier
\nwarned that the government should not resort to any form of
\ncapital controls due to the country's weak legal system. He said
\ncontrols would only prompt black market activities to flourish.<\/p>\n
He, however, supported plans to monitor capital flows, and
\nsuggested that for any system to be efficacious, Bank Indonesia
\nshould be joined by the tax directorate general in managing the
\nmonitoring system, as happened in the U.S.<\/p>\n
\"With such a system, we can check and monitor where the money
\ncomes from, whether it is from speculation activities, money
\nlaundering or income which hasn't been taxed\" he said. (rei\/har)<\/p>",
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