Businesses, Analysts OK Govt's 9th Stimulus Package
Jakarta. Indonesia’s ninth economic stimulus package announced late on Wednesday (27/1) drew positive responses as it was seen as a breakthrough in accelerating the development of power projects and help lower logistics costs.
“This package is pretty concrete, though it needs time to be implemented,” said Eric Alexander Sugandi, an economist with the Jakarta-based think tank Kenta Institute.
On Thursday’s closing, the benchmark Jakarta Composite Index rose 0.42 percent to 4,602.8.
Some 4.73 billion shares worth a combined Rp 5.56 trillion ($400 million) were traded on the Indonesia Stock Exchange (IDX) on the day.
Foreign investors accounted for 47 percent of the trading activity and they booked a net buy of Rp 8.7 billion.
The rupiah inched up slightly to 13,873 against the dollar on Thursday from 13,876 a day earlier, according to Bloomberg Business Spot Exchange Rate. The rupiah has fallen 0.61 percent this year.
“We believe the government’s policy package aims for the growth momentum and at the same time it would manage inflation through a better logistics,” Leo Rinaly, an economist at the Mandiri Sekuritas, said in a statement on Thursday.
In the announcement that was made at the state palace late on Wednesday (27/1), Chief Economics Minister Darmin Nasution said the administration of President Joko Widodo aims to push electrification rate to 97.2 percent of the country’s population in 2019, up from 87.5 percent recently.
He said to achieve this, power capacity in the country needs to grow by 8.8 percent per year.
“This is based on a projection of a 6 percent growth per year,” Darmin said, taking into account of potential deviation of 1-2 percent.
As of the end of last year, the total installed electricity capacity in Indonesia stood at 53 GigaWatt, and state utility company PLN has sold 220 Terra-Watt Hour of electricity.
Darmin said Joko will in the near future release a presidential regulation to support the development of power projects.
Foods and gogistics
The package, that is a continuation of a series of economic policy packages released since September last year, will also tackle the foods industry and logistics sector.
Darmin said the government will open the tap for cattle imports to help supply domestic needs.
He said domestic production of meats only reached about 439,530 tons per year, equivalent to 2.5 million head of cattle.
Meanwhile, for this year, Indonesian consumers need 674,690 tons of meat, or equivalent to 3.9 million head of cattle.
Darmin said the government will enlarge areas for cattle importing countries that can provide cattle that fits the health standard set by the World Organization for Animal Health.
In logistics, the government will revise a ministerial regulation that would help reduce the price for private commercial postal services, so that they can compete with the state-postal services catered by state-owned Pos Indonesia.
The revision is aimed to help boost commercial postal services by the private sectors, meaning a better growth for distribution services that support e-commerce.
The government also plans to integrate billing for port services that are catered by state-owned enterprises into a single billing system.
The policy package will also integrate the National Single Window system, which processes export and import documents electronically with the ‘Inaportnet’ system that deals with permits for ships and cargos, permits for containers entry into the prot, manifest data for domestic and overseas ships and electronic payment for shipping and cargo activities.
By integrating these services, customers can track their flow and movement of goods at the port as well as reducing dwelling time.
Darmin also said the government plans to revise a ministerial regulation that will make it mandatory for any transportation activities in the country to use rupiah currency for any payments.
Previously, this was not regulated, causing some activities at the port to use dollars instead of rupiah.
The good and bad
Business community responded differently to the policy package. Juan Permata Adoe, a deputy chairman at the Chambers of Commerce and Industry (Kadin) in charge for strategic foods affairs, said the government made a breakthrough by opening up imports of cattle as it will help stabilizing domestic supply.
“Don’t look at importing cattle as a threat for local breeders. The government is now still in the process of developing a new technique of breeding. If this program works, it can provide a better supply for the nation,” he said.
He said Indonesia relies too much on imports of cattle from Australia and New Zealand, but Juan suggested imports form Brazil and Uruguay as alternatives since they have met the health standards.
Still, Juan disagreed on importing meat, as it will not be productive for the nation.
The chairwoman of Indonesia National Shipowners Association Carmelita Hartoto expects the latest package to help develop the nation’s logistic industry.
“We hope there will be no more problems like dwelling time. If ministries and the related stakeholders have united, there will be no more delays [in cargo processing], like the one caused by documentations, which could take days [to resolve],” she said.
The plan to integrate the NSW with Inaportnet, Carmelita said, is an old plan, but to date, no government regulation forces the implementation.
On rupiah use for transportation activities, she said the government must be careful in the implementation phase, as not all transportation activities, especially those involving exports and imports or activities at ports, can use the rupiah.
Writing by Muhamad Al Azhari
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