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PR Newswire
10-09-2015, 06:37 AM
http://uk.reuters.com/article/2015/09/09...C120150909
UPDATE 2-Indonesia unveils stimulus package to lure investment
* President streamlines dozens of trade, industry regulations
* Next installment of stimulus package to be announced later this month
* Most regulations will only have short-term impact-chief econ min (Updates with announcement)
By Gayatri Suroyo and Bernadette Christina
JAKARTA, Sept 9 (Reuters) - Indonesia's president on Wednesday unveiled the first installment of a stimulus package aimed at luring more investment, boosting consumer spending, and supporting a currency that has weakened to 17-year lows.
Investor sentiment towards Southeast Asia's largest economy has soured, as President Joko Widodo struggles to implement much needed reforms, hobbled by rifts within his own political party and squabbles among government agencies.
In a live television broadcast, Widodo announced a series of measures to attract investment, such as streamlining dozens of overlapping trade and industry regulations, simplifying the permission process for "strategic projects", and easing rules for foreigners opening bank accounts in foreign currency.
The government also announced it would provide more rice for the poor and look for cheaper foreign beef to tame inflation.
"I want to underline that this economic package is aimed at stimulating the real economy, which will have an impact to our economy in the future," Widodo told reporters at the presidential palace.
The second installment of the "massive deregulation" package is expected to be announced by month-end, and could include revisions to the so-called negative investment list that details sectors restricted to foreign funds.
Widodo offered few details, however, on how the changes would resolve tougher, entrenched problems such as the country's poor infrastructure.
Indeed, chief economics minister Darmin Nasution told reporters after the announcement that most of the regulations would have a short-term impact.
Government officials "are in a panic," said Wisnu Wardana, Jakarta-based economist at Bank CIMB Niaga. "As long as infrastructure hasn't started, the market won't be happy. We're quite fixated on that."
In March, after the rupiah hit its lowest level since 1998, Widodo launched his first policy package, which included a plan to impose temporary anti-dumping import duties and waive visas for visitors from dozens of countries.
But the rupiah has weakened steadily since, as Southeast Asia's largest economy slowed and the U.S. dollar climbed on expectations for the Federal Reserve to raise interest rates later this year, pressuring emerging market currencies.
The rupiah touched a fresh 17-year low on Tuesday and was trading at 14,257 per dollar on Wednesday, taking its losses in 2015 to around 13 percent.
In the second quarter, Indonesia's annual economic growth dropped to 4.67 percent, its slowest pace since 2009, with prices for commodity and energy exports remaining weak. (Additional reporting Fergus Jensen, Kanupriya Kapoor, Hidayat Setiaji, and Wilda Asmarini; Writing by Randy Fabi; Editing by Clarence Fernandez)
UPDATE 2-Indonesia unveils stimulus package to lure investment
* President streamlines dozens of trade, industry regulations
* Next installment of stimulus package to be announced later this month
* Most regulations will only have short-term impact-chief econ min (Updates with announcement)
By Gayatri Suroyo and Bernadette Christina
JAKARTA, Sept 9 (Reuters) - Indonesia's president on Wednesday unveiled the first installment of a stimulus package aimed at luring more investment, boosting consumer spending, and supporting a currency that has weakened to 17-year lows.
Investor sentiment towards Southeast Asia's largest economy has soured, as President Joko Widodo struggles to implement much needed reforms, hobbled by rifts within his own political party and squabbles among government agencies.
In a live television broadcast, Widodo announced a series of measures to attract investment, such as streamlining dozens of overlapping trade and industry regulations, simplifying the permission process for "strategic projects", and easing rules for foreigners opening bank accounts in foreign currency.
The government also announced it would provide more rice for the poor and look for cheaper foreign beef to tame inflation.
"I want to underline that this economic package is aimed at stimulating the real economy, which will have an impact to our economy in the future," Widodo told reporters at the presidential palace.
The second installment of the "massive deregulation" package is expected to be announced by month-end, and could include revisions to the so-called negative investment list that details sectors restricted to foreign funds.
Widodo offered few details, however, on how the changes would resolve tougher, entrenched problems such as the country's poor infrastructure.
Indeed, chief economics minister Darmin Nasution told reporters after the announcement that most of the regulations would have a short-term impact.
Government officials "are in a panic," said Wisnu Wardana, Jakarta-based economist at Bank CIMB Niaga. "As long as infrastructure hasn't started, the market won't be happy. We're quite fixated on that."
In March, after the rupiah hit its lowest level since 1998, Widodo launched his first policy package, which included a plan to impose temporary anti-dumping import duties and waive visas for visitors from dozens of countries.
But the rupiah has weakened steadily since, as Southeast Asia's largest economy slowed and the U.S. dollar climbed on expectations for the Federal Reserve to raise interest rates later this year, pressuring emerging market currencies.
The rupiah touched a fresh 17-year low on Tuesday and was trading at 14,257 per dollar on Wednesday, taking its losses in 2015 to around 13 percent.
In the second quarter, Indonesia's annual economic growth dropped to 4.67 percent, its slowest pace since 2009, with prices for commodity and energy exports remaining weak. (Additional reporting Fergus Jensen, Kanupriya Kapoor, Hidayat Setiaji, and Wilda Asmarini; Writing by Randy Fabi; Editing by Clarence Fernandez)
