Kalla cuts short China visit over rupiah

Kalla cuts short China visit over rupiah

Rendi A. Witular, The Jakarta Post, Beijing

Vice President Jusuf Kalla has to erase from his agenda his round
of golf as the rupiah hit another record low in early trading on
Tuesday during his absence.

Instead, the number two man in the government is scheduled to
attend a special Cabinet meeting on Thursday to discuss ways to
defend the rupiah.

Aboard the Garuda Indonesia Boeing 737-400 heading to Beijing,
Kalla announced that he would cut short his six-day business trip
to China and Japan, including a round of golf with Toyota Motor
Corp. executives in Nagoya.

During a stop in Hong Kong, Kalla received reports that the
rupiah had hit Rp 11,800 against the U.S. dollar, leaving
President Susilo Bambang Yudhoyono in panic mode as the country's
economic affairs have over the last year mostly been in Kalla's
hands.

"Due to our unfavorable monetary situation, I decided to
return home earlier than scheduled, so I could help the President
ease pressures on the rupiah," he explained.

Kalla will still have lunch with Chinese Vice President Zeng
Qinghong and meet several Chinese businessmen on Wednesday before
heading back to Jakarta.

The VP was originally slated to visit Osaka and Nagoya in
Japan from Thursday to Sunday. The visit was mostly aimed at
meeting Japanese businessmen to encourage them to invest in
Indonesia.

Kalla said he had called Coordinating Minister for the Economy
Aburizal Bakrie and Bank Indonesia (BI) Governor Burhanuddin
Abdullah to help with the immediate efforts to ease the foreign
exchange pressures.

He also called three senior Indonesian business executives
asking them to help the government reduce the fluctuation, which
had put the rupiah at its lowest level for more than four years
-- before a rebound in afternoon trading. But the names of the
business executives were not revealed.

"The plunging rupiah can cause serious problems for the real
sector since the price of goods will rise further and create
massive inflationary pressures. Although we will benefit from our
exports, the country, in general, will not benefit at all," said
Kalla.

The rupiah on Tuesday rebounded to close at Rp 10,525 per
dollar, up by nearly 3 percent from its four-year low on the
previous trading day, after BI raised its benchmark interest rate
by 75 basis points to 9.5 percent at around noon on Tuesday.

"If the rupiah declines by 4 percent per day, we should unite
to address the problem... We must maintain the psychology of the
market to remain favorable to avoid further declines in the near
future," said Kalla.

He also said he would instruct economic ministers to speed up
the preparation to reduce fuel subsidies by raising fuel prices
as it was the only feasible solution to help stabilize the
country's monetary condition.

When asked if the fuel hike would be decided soon, as he had
mentioned it would be by January at the latest, Kalla said he
would explore the possibility.

However, State Minister of State Enterprises Sugiharto said
that Susilo would not raise fuel prices in the foreseeable future
until the Central Statistics Agency (BPS) completed its
registration for the number of poor people eligible to receive
low income assistance funds.