Government Must Increase Incentives, Bussinesses Say

As long as the rupiah remains weak, production costs will increase. In such a situation, no matter how extensive the social safety net is, it will face challenges, ultimately impeding economic growth.

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25 Okt 2023 - 21.21
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Government Must Increase Incentives, Bussinesses Say

Illustration - The atmosphere in one of the processing factories./Bisnis-Abdullah Azzam

Bisnis, JAKARTA – The new incentive housing, which was touted as a booster for the national economy's resilience against global uncertainties, turns out to be quite conservative. This is reflected in the direction of government stimulus, which is only focused on the demand side.

However, the high complexity of economic challenges caused by the strengthening of the US dollar and geopolitical tensions in the Middle East presents a broad range of challenges. The strengthening of the US dollar due to rising yields on government bonds has weakened the Indonesian rupiah, which, in turn, burdens the production side.

As a result, transactions for imported goods, including raw materials and aids, still use the US dollar. Inevitably, production costs soar, which will ultimately lead to higher consumer prices. Not only that, the depreciation of the rupiah also poses a risk to external resilience due to the depletion of foreign exchange reserves, as monetary instruments to support the Indonesian currency still need to be optimized.

Moreover, geopolitical tensions in the Middle East risk driving up global oil prices, which are a significant factor in inflation, whereas subsidies are expected to swell.

Cek Berita dan Artikel yang lain di Google News dan WA Channel
Editor: Yusuf Waluyo Jati
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Government Must Increase Incentives, Bussinesses Say

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