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