Jakarta, weak currency and rising prices threaten economic growth
Jakarta (AsiaNews) - The devaluation of the rupiah against the U.S. dollar , which in recent days has reached high levels , is likely to jeopardize the growth prospects of one of the most promising economies of the Asia-Pacific region . Inflation has first hit industries and companies with a rising costs of raw materials. Now it is also affecting families, with the rising prices of basic necessities such as soybeans, the basic ingredient of many daily recipes. The warning is confirmed by experts and economist , who speak of a "fragile and uncertain " situation, the government is trying to run for cover and does not rule out raising taxes for higher bands, in particular targeting the luxury goods.
In recent days, the Indonesian
currency hit an all time low over the last three years, with an exchange rate
against the dollar of 1 to 11,300 , while in the past it averaged 9.500/9.800
rupees to the dollar. This brings to mind the financial crisis of the late '90s
, when there was a minimum of 1 to 12,000 when , a few months before, the
exchange rate was 2.200/2.500 .
Among
the main consequences of the financial crisis of the 90s , the fall of the
thirty-year regime of President Suharto ( 1967-1998 ), his successor , BJ
Habibie , fared no better with a monetary crisis that led the rupee to its
lowest point ( 1
to 18,000 to the dollar ) in 1999 and the expulsion of the head of state. Elements
that spread fear among the members of the government of President Susilo
Bambang Yudhoyono .
At first, the current crisis did
not seem to affect the population. The
initial impact from the unfavorable exchange rate hit business and enterprise
with rising prices in the import of materials. However,
this factor then spread to the electronics and the motor industry. Today,
however, it is also impacting the prices of food and basic necessities, as well
as shipping and commercial ports.
Economists
and financial experts in Jakarta emphasize that Indonesia's external debt, the
most populous Muslim nation in the world and among the most dynamic in South
-East Asia , will increase " up to 30% " because of the crisis ,
adding to the devaluation of the currency.
This is also confirmed by the
vice -president (and former governor of the Central Bank ) Boediono , who
states that it is an economic " red alert " . "The
situation is fragile and uncertain ," he adds , the passive data in
exports and flight of capital in dollars are not signals that lead to cause for
optimism. However,
he vehemently denies the suggestion that the country could slip back to the
levels of black three-year period 1997-1999 , which then led to the
intervention of the International Monetary Fund (IMF ) to save the country's banking
system .
Moreover
in recent years more and more industrialists, entrepreneurs and foreign
investors have decided to transfer companies and factories from Indonesia to
other nations, particularly Vietnam. This
fuelled by the uncertainty of the law and excessive bureaucracy , which
combined with the stratification of institutions and skills makes it difficult
to do business in the archipelago. Many
are critical of the reform law passed by Parliament in 1998 - post- Suharto
dictatorship - that hands regional leaders (a sort of governor of the area of
jurisdiction ) the power to grant and take away business concessions.
To
address this problem and remedy the state crisis, the Inland Revenue , the
Central Bank and the Ministry of Finance proposed a revision of the tax system
, which will affect goods and luxury items previously exempt from tax such as
expensive private jets , boats and luxury cars. The increase will vary
from 75% to 125 / 150%.
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