INSTILLING CONFIDENCE
Prasetyo outlined a number of government strategies aimed at building and restoring public trust amid recent economic turmoil.
“President (Prabowo) reiterated several undertakings that, in our opinion, are part of the efforts to instill confidence in business actors, which in turn will build public trust,” Prasetyo was quoted as saying by Tempo.
Prabowo, he said, has emphasised the importance of deregulation to streamline licensing, allowing the investment climate to flourish and the national economic ecosystem to become more competitive.
The president has also called for downstreaming and industrialisation to be accelerated, he said.
Indonesia’s economic and financial policies have come under pressure in recent weeks.
For instance, its tougher approach to natural resources and foreign investment drew the concern of investors, with a Chinese business group complaining in a letter to Prabowo that rising costs, stricter enforcement and alleged misconduct by officials were hurting Chinese-backed companies in Indonesia.
Its establishment of a new government body, Danantara Sumber Daya Indonesia (DSI), to manage the export of key commodities such as crude palm oil, coal and ferroalloys, also rattled markets.
Indonesia’s stock market has faced turbulence this year, with the benchmark Jakarta Composite Index slumping to its lowest level in five years earlier this month.
The rupiah hit an all-time low last week, and the Indonesian government intervened to steady the currency and calm the stock market. The central bank announced an emergency off-cycle rate hike while the government increased yields on Indonesian assets to attract portfolio inflows and support the rupiah.
Analysts previously told CNA the steps had calmed markets in the short term. To restore credibility in the longer term, the government should show credible fiscal correction, reduce policy surprises and avoid statements that appear hostile to foreign investors, experts said.
Prasetyo noted the strengthening of the rupiah is inextricably linked to export and import performance which, in turn, is linked to the implementation of downstreaming and industrialisation programmes.
He said stability is crucial to the business climate, and the government is calling on the public, market players, and economic actors to work together and strengthen the economy.
