Ada Pertanyaan? Hubungi Kami 
Ada Pertanyaan? Hubungi Kami Fathan Qorib, Andin Aditya Rahman
The United States Federal Reserve is planning to decrease its monetary stimulus packages to other countries in undertaking what is commonly referred to as quantitative easing.
This is of concern to Indonesia as such actions could potentially aggravate Indonesia’s current high inflation rate and fluctuating Rupiah exchange rate.
In the midst of these difficult circumstances, micro, small and medium businesses (UMKM) could prove to be Indonesia’s new hope.
According to Agus D.W. Martowardojo, Governor of Bank Indonesia (BI), any quantitative easing by the Federal Reserve is generally viewed as likely to have negative impacts on Indonesia’s financial sector.
Although these negative impacts would not be immediately detectable, BI must take steps in anticipation of such circumstances considering that the global economy has not yet fully recovered from its recent crisis.
“Our financial sector may be affected and the policy by the Federal Reserve must be given special attention with the Rupiah continuously fluctuating,” the Governor stated during a discussion titled “Cluster Seeds and Dissemination of UMKM Financial Patterns” in Jakarta last Friday.
In addition, he continued, the prices of Indonesia’s main export commodities has continued to decline over the last couple of years. On average, the prices of these commodities decreased by 18 to 19 percent in 2012. This year, they have decreased by an additional 13 to 14 percent with and it is predicted that decreases will continue in 2014.
According to the Governor, the widespread price decreases for Indonesian exports will put pressure on the domestic economy.
The declining prices of Indonesian exports will increase imports to Indonesia, which will negatively impact on the Rupiah’s exchange rate.
All of this, the Governor explained, has created the current high domestic inflation rate which is a pressing concern for Indonesian citizens that cannot be resolved anytime soon.
“The high inflation rate must be monitored, and must not increase any higher because it will further erode the income of Indonesian citizens, specifically those with a fixed income,” the Governor asserted.
Without great care, inflation this year could reach more than 9.8 percent instead of the assumed rate of 9 percent.
“This is the challenge that we face,” he asserted.
A solution to this issue, according to the Governor of BI, is to strengthen domestic UMKM. With appropriate support and encouragement, UMKM could prove to be an irreplaceable source of growth for Indonesia’s economy.
“Businesses are 99 percent UMKM, and the remaining one percent is large businesses. So, Indonesia is really dominated by UMKM,” stated Agus.
In addition to being the dominant business group, UMKM jointly contribute to 56 percent of Indonesia’s gross domestic product (GDP) and 91 percent of domestic employment..
Perry Warjiyo, Deputy Governor of BI, stated that BI has indications that this quantitative easing policy by the Federal Reserve has caused central banks in developed nations to also decrease their monetary stimulus.
“We will continue to monitor the tapering by the Federal Reserve. There is currently a tendency for central banks in developed countries to begin decreasing their monetary stimulus,” he explained.
The Deputy Governor also informed that there are indications of increases in international interest rates, and a slowdown of the global economy..
“Those are the results of our observations. We are also seeing changes to the world’s geopolitics, which is affecting the international oil industry and commodities. That is what we have observed,” concluded Perry.
(hot/kc)
Fathan Qorib, Andin Aditya Rahman
The United States Federal Reserve is planning to decrease its monetary stimulus packages to other countries in undertaking what is commonly referred to as quantitative easing.
This is of concern to Indonesia as such actions could potentially aggravate Indonesia’s current high inflation rate and fluctuating Rupiah exchange rate.
In the midst of these difficult circumstances, micro, small and medium businesses (UMKM) could prove to be Indonesia’s new hope.
According to Agus D.W. Martowardojo, Governor of Bank Indonesia (BI), any quantitative easing by the Federal Reserve is generally viewed as likely to have negative impacts on Indonesia’s financial sector.
Although these negative impacts would not be immediately detectable, BI must take steps in anticipation of such circumstances considering that the global economy has not yet fully recovered from its recent crisis.
“Our financial sector may be affected and the policy by the Federal Reserve must be given special attention with the Rupiah continuously fluctuating,” the Governor stated during a discussion titled “Cluster Seeds and Dissemination of UMKM Financial Patterns” in Jakarta last Friday.
In addition, he continued, the prices of Indonesia’s main export commodities has continued to decline over the last couple of years. On average, the prices of these commodities decreased by 18 to 19 percent in 2012. This year, they have decreased by an additional 13 to 14 percent with and it is predicted that decreases will continue in 2014.
According to the Governor, the widespread price decreases for Indonesian exports will put pressure on the domestic economy.
The declining prices of Indonesian exports will increase imports to Indonesia, which will negatively impact on the Rupiah’s exchange rate.
All of this, the Governor explained, has created the current high domestic inflation rate which is a pressing concern for Indonesian citizens that cannot be resolved anytime soon.
“The high inflation rate must be monitored, and must not increase any higher because it will further erode the income of Indonesian citizens, specifically those with a fixed income,” the Governor asserted.
Without great care, inflation this year could reach more than 9.8 percent instead of the assumed rate of 9 percent.
“This is the challenge that we face,” he asserted.
A solution to this issue, according to the Governor of BI, is to strengthen domestic UMKM. With appropriate support and encouragement, UMKM could prove to be an irreplaceable source of growth for Indonesia’s economy.
“Businesses are 99 percent UMKM, and the remaining one percent is large businesses. So, Indonesia is really dominated by UMKM,” stated Agus.
In addition to being the dominant business group, UMKM jointly contribute to 56 percent of Indonesia’s gross domestic product (GDP) and 91 percent of domestic employment..
Perry Warjiyo, Deputy Governor of BI, stated that BI has indications that this quantitative easing policy by the Federal Reserve has caused central banks in developed nations to also decrease their monetary stimulus.
“We will continue to monitor the tapering by the Federal Reserve. There is currently a tendency for central banks in developed countries to begin decreasing their monetary stimulus,” he explained.
The Deputy Governor also informed that there are indications of increases in international interest rates, and a slowdown of the global economy..
“Those are the results of our observations. We are also seeing changes to the world’s geopolitics, which is affecting the international oil industry and commodities. That is what we have observed,” concluded Perry.
(hot/kc)