Jakarta – The declining rupiah exchange rate, which currently stands at Rp 14,300 per US dollar, must be used to create momentum to consolidate Indonesia's business potential, according to one expert, so that Indonesian companies can be more competitive in the ASEAN Economic Community (AEC), which will start in 2016.
"The government must be realistic and both Indonesian people and business players must prepare their mental and psychological readiness to face whatever comes, including, potentially, the rupiah exchange rate exceeding Rp 15,000 per dollar in the near future," said Ismed Hasan Putro, head of cooperatives and small and medium enterprises management at the Association of Indigenous Indonesian Businesspeople (HIPPI), as quoted by Antara in Jakarta on Tuesday.
He said that in the current economic crisis, Indonesian people could learn from the two previous crises, during which most parts of society did not get too worried despite a crippled economy.
Nevertheless, Ismed said, the government must anticipate US dollar pressures against the rupiah, which were getting stronger, by lowering interest rates and reducing fuel prices to maintain both national economic resilience and business competitiveness.
He further said the government must eliminate rent-seeking and high-cost economics, which had the potential to weaken Indonesia's business competitiveness.
The government should also delay electricity price hikes and simplify the bureaucratic permit procedures that had made business players and investors somewhat reluctant to invest in the country, he added.
Ismed said the government also needed to give special incentives for new players in cooperatives and small and medium enterprises.
"It has been proven that during the 1998 and 2008 crises, business players from cooperatives and small and medium enterprises supported the government by helping to maintain the national economy and business growth," said Ismed, a former director of state-owned agribusiness firm PT Rajawali Nusantara Indonesia (RNI). (ebf)