Indonesian govt issues fourth installment of economic policy package

Indonesian govt issues fourth installment of economic policy package

Pramono Anung. (ANTARA/Yudhi Mahatma)

We hope the latest economic policy package can easily boost the business world."
Jakarta (ANTARA News) - The government on Thursday announced the fourth installment of its economic policy package, aimed at enhancing employment, increasing the number of micro loans (KUR) recipients and facilitating export development by small businesses.

Thursdays policy package is a follow up of the first and second phases of the policy package issued in September and the third installment announced on October 7.

The fourth installment is primarily aimed at solving the problems in the manpower sector, enhancing the number of KUR recipients and boosting exports for small-scale businesses.

"We hope the latest economic policy package can easily boost the business world. This policy is expected to facilitate of the growth in job opportunities and incoming investment," Cabinet Secretary Pramono Anung said on Thursday.

He said the newly announced policy package, therefore covered polices on the deregulation of the wage system, expansion of KUR recipients and the extension of credit by the Indonesian Export Financing Institution (LPEI) to small-scale businesses so that they can ramp up their exports.

Earlier, Chief Economic Minister Darmin Nasution had stated that the fourth phase of the governments economic policy packages would focus on the efforts to overcome problems in the manpower sector.

"The fourth tranche will mostly deal with the employment problem, the formulation of minimum wages, and manpower licenses. It will be related to several licenses," Nasution said on Tuesday.

The chief economic minister did not elaborate too much on the fourth tranche. However, it is certain that there will be a streamlining of bureaucratic licensing procedures to offer convenience to workers.

In order to overcome the manpower problem, the chief economic minister explained that the fourth phase of the policy packages would also include details regarding additional regulations, which will facilitate the extension of micro loans for small businesses, known as KUR credits.

Darmin Nasution said that basically the Indonesian government issued a series of economic policy packages in an effort to maintain the countrys economic fundamentals in the face of dynamic global challenges.

"We are trying to boost economic activities through investment and government capital expenditure, hoping that the economy will move positively," Darmin said at an event held to publicize the governments economic policy package on Thursday.

Darmin Nasution said that previously the government has issued packages in three phases. They were issued after the government observed an economic slowdown as a result of the economic turmoil in the United States and China early in 2015.

The conditions had led to Indonesias export performance slowing down and capital outflow causing the exchange rate of the Rupiah against the U.S. dollar to continue weakening until the end of September.

"In the face of such a situation, exports of natural resources declined suddenly and there was an indication that the United States was willing to raise interest rates. These problems accumulated, with the economy slowing down and the unfavorable exchange rate of the Rupiah continuing to worsen over the past one year," Darmin explained.

On October 7, the government announced the third tranche of its economic policy package, which among others covered cuts in the prices of fuel oils, electricity tariff and gas, expansion in the number of micro loans, and streamlined land business permit procedures for capital investment.

This policy package is a follow up of the first and second phase of the economic policy packages announced in September, which among others covered deregulation. It aims to improve the investment climate and accelerate development projects.

The guideline of the issuance of the economic policy package is to expedite the conducive development of a macro economy, boost the national economy, protect low-income people and improve the development of the village economy.

"The first economic package was announced early in September. We admitted that it was too ambitious because it covered too many regulations. We also introduced the package to convince the market that we are serious. But the market read it differently," noted the chief economic minister.

However, the second and third phase of the policy packages having a short-term impact were more practical in responding to problems, such as those concerning investment licensing so that the markets response was more positive.

According to Darmin, besides the postponement of the U.S. Federal Reserves decision to raise interest rates, the positive response to the issuance of policy packages had also caused the Rupiahs value to strengthen during the last several days.

"The Rupiah had weakened because we failed to convince the market. So, we are trying to improve this. The currencies of other countries have also strengthened against the greenback, but currencies which were quick to strengthen also belonged to states, which had adopted the most convincing economic improvement measures. This is what we are trying to do," Darmin stated.

Indonesias rupiah currency has appreciated from about Rp14,709 per US dollar a week earlier to Rp13,483 on Monday.

According to Vice President Jusuf Kalla, all economic policy packages of the government, including the fourth tranche issued on Thursday, aim to improve Indonesias economic conditions.

"Regulations outlined in the economic policy packages aim to help the economy develop in a better, easier, and cost-effective manner, so that it will become more efficient," the vice president remarked while giving a public lecture at the Economic Faculty of the Trisakti University on Thursday.