Save the rupiah<\/p>\n
I am an expatriate living in Indonesia for the last three
\nyears. Indonesia is a fantastic country to live in with its
\ndiversity in culture, people and the scenic landscape. It is a
\nshame to observe over the last few months, especially since
\nDecember last year, that the people of this nation are allowing
\nthe rupiah to continue falling to such an unrealistic level.<\/p>\n
For more than 30 years under the rule of President Soeharto,
\nthe rupiah had never undergone devaluation, but since July last
\nyear the value of the rupiah has fallen so drastically that it no
\nlonger reflects its true value. The government and the people
\nshould rally all their support behind the President and map out a
\nconcrete action plan to solve this monetary crisis as quickly as
\npossible.<\/p>\n
The time is now ripe for the government to explain what the
\ncauses of the crisis were. And having identified these causes,
\ntell the people what immediate steps will be taken to overcome
\nthis crisis. The rupiah must not be allowed to continue to fall,
\nfor if it falls further U.S. dollar debt servicing will become
\nimpossible and many business ventures will go bankrupt with the
\nresultant effect of increased unemployment that will cause great
\nhardship to the people, especially the poorer ones. A basic
\neconomic crisis could turn into a social and political crisis.<\/p>\n
The current situation has shown that the people have panicked
\nand grown selfish -- thinking of their own interest first, ahead
\nof the nation. They become blinded to the fact that if the nation
\nfalls, they will also fall with it. They rushed to dump their
\nrupiah and converted them to U.S. dollars. Corporate businesses
\nalso joined the rush to buy U.S. dollars as they have to repay
\ntheir foreign debts and this also contributes to the rupiah's
\nfalling value.<\/p>\n
The only possible solution to the crisis, as an immediate
\nmeasure is:<\/p>\n
* To increase interest rates on short-term rupiah deposits to
\nsuch an attractive level that it can be the \"carrot\" to influence
\nthe people to convert their U.S. dollars into rupiah and place
\nthem in a special short-term rupiah deposit scheme introduced by
\nthe government to save the rupiah. The scheme is a simple time
\ndeposit in rupiah of 100 million and above for a minimum three
\nmonth period and at an attractive interest rate of 100 percent
\nper annum. The rate may seem \"crazy\" but the rupiah has fallen to
\nsuch a \"crazy\" rate against the U.S. dollar (the current rate of
\nRp 10,000 to US$1 is four times the rate of Rp 2,500 to US$1 in
\nJuly 1997). Only such a \"crazy\" rate will attract people to
\nconvert their U.S. dollar into rupiah again. The government has
\n\"to bite the bullet\" and take this immediate step to save the
\nrupiah.<\/p>\n
* Close and careful monitoring of the deposit scheme during this
\nthree to six month period would allow reevaluation. If the rate
\nof US$1 to Rp 4,000 can be achieved, the interest rate can then
\nbe reduced, but gradually, for any sharp reduction could send the
\n\"wrong signal\" again. Should this desired rate of Rp 4,000 have
\nnot yet been achieved, consideration and reevaluation can be
\ngiven to extending it for a further three to six month period.<\/p>\n
MOSES K. H. PHUA<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/save-the-rupiah-1447899208", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }