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Depreciating rupiah brings potential benefits to manufacturing, service sector industries: Minister
Finance Minister Bambang Brodjonegoro predicted that manufacturing and service-sector industries could take advantage of the current fluctuation of the rupiah exchange rate that had continued to weaken against the US dollar
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inance Minister Bambang Brodjonegoro predicted that manufacturing and service-sector industries could take advantage of the current fluctuation of the rupiah exchange rate that had continued to weaken against the US dollar.
'We have opportunities and are certain that when rupiah depreciates, we can take advantage of the situation. This is especially for the manufacturing sector, that has natural resource-based superiority, or the automotive sector,' he said as quoted by Antara in Jakarta on Saturday.
The minister went on to say that Indonesia could gain momentum from the depreciating rupiah and pushed up exports in the manufacturing industry. Moreover, major players in the manufacture industry, such as Australia and Japan, were currently facing difficulties in developing their manufacturing sectors competitively.
'Japan is facing a problem of high wages and struggling to deal with the country's rapidly growing number of older workers. Australia is experiencing a massive closure of manufacturing activities. With the depreciating rupiah, we can be competitive by, among others things, pushing car and motorcycle exports,' said Bambang.
He further said another industry that could take advantage of the weakening of rupiah and contribute more to the services trade balance was the tourism sector as tourists could exploit the cheaper rupiah exchange rate.
Bambang said the government was ready to give the manufacturing industry players a number of incentives, namely tax allowances and tax holidays. In a newly revised government regulation, 95 percent of tax allowances and tax holidays would be allocated for the manufacturing industry.
'If we look at the list of tax allowance beneficiaries, we can say that 95 percent of them are from the manufacturing sector while the remaining are for agricultural and service sectors, among others. Meanwhile tax holidays will be fully provided for manufacturing sectors. This shows that our fiscal policy takes side with the manufacturing sector,' said Bambang.
By giving incentives to and promoting potentials of the sectors, it was hoped that Indonesia's current account that had not yet run optimally and still experienced a deficit could improve and help the strengthening of economic fundamentals. (ebf)(+++)
