The Jakarta Post
The government is preparing incentives for export-oriented and tourism industries to support the flow of foreign exchange into the country.
Finance Minister Sri Mulyani Indrawati said the policy was needed to improve the country’s worsening current account deficit (CAD). “We have to address the CAD if we want our economy to develop,” said Sri Mulyani, as reported by kontan.co.id on Wednesday.
The country is recording a mounting current account deficit this year in line with the worsening trade deficit, which reached US$2.83 billion through May, compared to a $5.99 billion surplus in the same period last year.
Meanwhile, the country’s CAD is estimated to further swell this year, as the figure reached $5.54 billion through May, compared to $2.16 billion in the same period last year.
“On the taxation side, the incentives could be in the form of tariff cuts or a tax holiday,” Sri Mulyani said.
Meanwhile, on the monetary side, incentives could be in the form of a bank interest rate subsidy or other support for certain business sectors, Sri Mulyani said, adding that she would coordinate with other institutions, like the Tourism Ministry, the Industry Ministry, Bank Indonesia and the Financial Services Authority (OJK).
Meanwhile, the head of the OJK’s consumer protection department, Anto Prabowo, said the OJK had started to discuss the incentive policy for businesses that encourage the inflow of foreign exchange. However, he declined to reveal details. “We have discussed it. Just wait for the results,” he added. (bbn)