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The next threat to globalisation? Capital controls
Indonesia, banking on demand for its mineral wealth, is tightening rules on how exporters are allowed to spend their money.
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At the same time as the rupiah is falling, Jakarta is tightening rules on how export revenue is used.
PHOTO: REUTERS
Mihir Sharma
Back in the day, when a country’s currency was under pressure, the worst thing you could do was impose capital controls. Stopping money from leaving might work temporarily, but it would cause investors to lose faith, and shut you out of financial markets in the long run. In a laissez-faire, globalising world, nothing could be worse than that.
Indonesia is now challenging that assumption, and may prove that we operate in a completely different global economy now.
