Sumitro calls for revision of foreign exchange regime<\/p>\n
JAKARTA (JP): Economic pundit Sumitro Djojohadikusumo called
\non the government to revise the current free foreign exchange
\nregime so as to better monitor the flows of capital in and out of
\nthe country.<\/p>\n
"In my opinion, the free foreign exchange system which is
\ncurrently in force must be revised or improved," Sumitro was
\nquoted by Antara as saying on Thursday.<\/p>\n
Speaking at a congress of the civil service cooperatives
\nmovement, Sumitro suggested that the government require all
\nexporters to sell their export earnings to Bank Indonesia at the
\nmarket rate with a guarantee that they could repurchase the
\nforeign exchange from BI at any time they needed it.<\/p>\n
That way, he said, the central bank would be able to monitor
\nthe flows of foreign exchange in a more timely manner.<\/p>\n
He noted that in the past the government also required all
\nexporters to repatriate their export earnings. Such a policy was
\npursued until 1983.<\/p>\n
In a time of crisis like now, the central bank must have
\naccurate data on the flows of capital, especially short-term
\ncapital, through registration or reporting of all capital flows.<\/p>\n
To improve its data collection, Bank Indonesia should require
\nall local firms wanting to raise loans overseas to report to the
\ncentral bank.<\/p>\n
If necessary, BI could oblige such companies to have a permit
\nto obtain foreign loans.<\/p>\n
Sumitro, nevertheless, warned that the revision of the current
\nfree-foreign exchange system should also take into account all
\nfactors affecting efforts to restore a sound economic situation.<\/p>\n
It needs a solid team of economic ministers in the current
\nreform cabinet to revise the forex system without affecting the
\nrecovery process, he said.<\/p>\n
However, he cast doubt on the ability of the current cabinet
\nto pursue such a safe forex system improvement as several
\nministers had their own political agendas.<\/p>\n
He warned that the country's economy would return to its
\ngrowth path only if there is stability on the political front.
\nNevertheless, he said: "Politics would stabilize only when the
\neconomy is going well."<\/p>\n
Sumitro, who held various economic ministerial posts under
\nboth the Sukarno and Soeharto administrations, warned the current
\nreform cabinet not to repeat the mistakes of the New Order
\nadministration under Soeharto.<\/p>\n
He singled out trade arrangements on various commodities like
\ncloves, rattan and oranges that had just benefited certain people
\nclose to the power holder.<\/p>\n
Soeharto's administration had also allowed excessive
\nexploitation of both manpower and natural resources like forests,
\noil and gas by a small number of people.<\/p>\n
The development of lucrative infrastructure projects had also
\nbenefited a limited number of people as the government did not
\nopenly tender such projects but instead appointed people close to
\nthe political elite to carry them out.<\/p>\n
Also, the use of science and technology neither supported nor
\noptimized domestic capability so that it was only a waste of
\nforeign exchange.<\/p>\n
Those mistakes, Sumitro said, should serve as educative
\nexperience in drafting a better economic policy which sided more
\nwith the people as a whole. The empowerment of the people's
\neconomy would eventually create a feeling of justice among the
\npeople. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/sumitro-calls-for-revision-of-foreign-exchange-regime-1447893297",
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