Sutedja & Associates Supported Young Professionals Group Britcham Indonesia Panel Discussion
On the May 26, 2015 the Young Professionals Group held a panel discussion on: How Critical is a Stable Rupiah to Domestic Business Development and International Competitiveness?. The event is sponsored by the Chartered Institute of Management Accountants (CIMA) and Sutedja & Associates Law Offices.
Andrew Sutedja, Partner of Sutedja & Associates Law Offices, in his capacity as the Chairman of the Young Professionals Group the British Chamber of Commerece in Indonesia delivered his opening speech on How Critical is a Stable Rupiah to Domestic Business Development and International Competitiveness?
The Indonesian President says he wants Indonesia to return to 7% annual growth-a rate unseen since the Asian financial crisis of the late 1990s, but not unusual before it. In reality, the economy is slowing. In the first quarter of this year it grew by 4.7% year on year, down from 5% in the previous quarter. The next question, should we worry about this?
Since 2014, we notice that at least the currency has lost 10% of its value against the US$ and it is a problem that is dogging Indonesia.
There are several problems leads into current volatility in the Indonesian Rupiah, amongst others:
- The strength of the US$ dollar;
- Political uncertainty;
- Unfriendly business environment;
- Shoddy infrastructure; and
- Inefficient bureaucracy.
Indeed, Indonesia cannot put much efforts on the first problem, but the Government should give more serious attentions on the rests.
What are the impacts on Rupiah’s depreciations?
- Business is slow down;
- Investors hesitate to invest because US$ has high value against the Rupiah;
- Store-owners close their businesses.
Government introduces eight policies to be implemented to stabilise the Rupiah – but how effective?
- Imposing a temporary anti-dumping duty on imported goods suspected of being sold on the domestic market below fair market value;
- Tax incentives for Indonesian companies that sell 30% of their products overseas;
- Freeing shipbuilders from VAT in a Government Regulation on domestic shipyard industry;
- Increasing domestic use of biofuels to reduce imports of oil and fuel;
- Tax incentives for foreign companies investing in Indonesia that do not repatriate 100% of their dividends to home countries;
- Finance Minister, Transportation Minister, Indonesian National Ship-owners Association (INSA) will formulate tax payments of foreign shipping companies;
- Encouraging merger of reinsurance operations of state-owned enterprises to boost capacity so companies can use domestic reinsurance instead of paying for the coverage overseas;
- Enforcing the use of the Rupiah for any transaction in Indonesia, as stipulated in the Indonesian Currency Law No. 7 Year 2011 and Bank Indonesia Regulation No. 17/3/PBI/2015.
Panelists for this discussion:
- Dr. Irfa Ampri – Executive Secretaryof Fiscal Policy Agency Ministry of Finance of the Republic of Indonesia;
- Ferdinand Sadeli – Executive DIrector and CFO Sinarmas Land; and
- Raja Sapta Oktohari – CEO OSO Group
L-R: Dr. Irfa Ampri (Ministry of Finance); Ferdinand Sadeli (CFO Sinarmas Land Group); Raja Sapta Oktohari (CEO OSO Group); Terzian A. Niode (HSBC & YPG Committee Member); Andrew Sutedja (Sutedja & Associates & Chairman of YPG Britcham Indonesia); Adrian Short (Director of Rolls Royce Indonesia & Chairman of Britcham Indonesia); Andrias Soesilo (CIMA).
Token of Appreciations for the Panelists.