The use of B20, a 20 percent biodiesel mix, could soon reduce reliance on imported oil, which means the country can minimize foreign exchange expenditures on oil imports, BI Governor Perry Warjiyo said in Jakarta on Friday.
Warjiyo explained that the use of B20 will boost palm oil production and exports and eventually increase the country`s foreign exchange.
He added that the current account deficit could improve after imports are controlled and exports increased.
The improved current account will also strengthen the rupiah`s exchange rate fundamentals, Warjiyo said.
"We will look at it in the next few months," he remarked. "(We hope) it will improve the current account deficit."
BI predicts that the current account deficit will increase by up to US$25 billion this year, equivalent to 2.5 percent of the national gross domestic product (GDP).
The figure represents a 44-percent rise compared to US$17.3 billion in 2017, representing 1.7 percent of the GDP for that year.
The Indonesian government is formulating a number of strategies, including the immediate implementation of a regulation on the use of B20, to save foreign exchange earnings.
Several programs have already been adopted by the government in a bid to save billions of US dollars in foreign exchange earnings, Industry Minister Airlangga Hartarto told the press after a limited cabinet meeting at the Bogor Presidential Palace on Tuesday, July 31, where strategies to achieve the said goal were discussed.
"We will implement the regulation on the use of B20, as well as other programs, to make retrenchments through the use of local components," Hartarto stated.
The programs, which include encouraging the use of B20, increasing the use of local components, and optimizing tourism services, are considered capable of reducing the balance of payment, he said, adding that similar programs aimed at saving foreign exchange earnings include a review of the list of imported goods.
Hartarto predicted that the government will be able to save US$2 billion in foreign exchange earnings by increasing the use of local components.
Reported by Indra Arief Pribadi
Edited by Bustanudin
Reporter: antara
Editor: Heru Purwanto
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