Indonesia set to unveil stimulus measures to bolster rupiah

A customer counting Indonesian rupiah banknotes at a shop in Jakarta on Aug 25, 2015.
A customer counting Indonesian rupiah banknotes at a shop in Jakarta on Aug 25, 2015.PHOTO: AFP

JAKARTA (REUTERS) - Indonesia will announce later on Tuesday (Sept 29) the second installment of a stimulus package aimed at supporting the rupiah and reviving growth in Southeast Asia's largest economy, chief economics minister Darmin Nasution said.

President Joko Widodo, along with his economics team, will unveil the latest measures at the presidential palace in the coming hours, the minister said.

As part of the package, the central bank is expected to take steps to increase the onshore supply of dollars, including a relaxation of requirements on forward dollar selling and a tax incentive for exporters to keep their dollars in local banks.

The government is not expected to announce revisions to the so-called negative investment list that details sectors restricted to foreign funds.

Investor sentiment towards the world's fourth most populous nation has soured, with Widodo struggling to implement much needed reforms, partly due to rifts in his own party and squabbles among government agencies.

The first installment of the stimulus package, announced three weeks ago, has had little affect on markets, and traders doubted whether the coming announcement would evince any significant reaction either.

"I don't have high hopes," said a Jakarta-based equities trader. "Some of the package we've heard will include incentives to repatriate export earnings, probably a tax holiday too. These will only show results in the mid-term to long-term."

Indonesia's stock index has fallen by 21 per cent so far this year, while the rupiah has weakened by nearly 16 per cent - the worst performing currency in emerging Asia after Malaysia's ringgit.

The first package of measures included streamlining dozens of overlapping trade and industry regulations to make it easier for investors, simplifying the permission process for "strategic projects", and easing rules for foreigners opening bank accounts in foreign currency.