FINANCE MINISTRY UNDER PRESSURE
Meanwhile, Finance Minister Sri Mulyani is coming under pressure to act as the Indonesian rupiah continues its slide. The currency has depreciated by 5 per cent against the US dollar in 2024 alone, fuelling import inflation which has now surged back past 3 per cent in a blow to consumers.
Markets had been expecting a cut in interest rates, which are contractionary at 6.25 per cent, but there is now a consensus that there won’t be a change until this summer.
At least a depreciating rupiah has helped Indonesian exports, which rose for the first time in 11 months in April, by 1.72 per cent from a year earlier to US$19.62 billion. In terms of non-oil and gas exports, China remains the top destination for Indonesian goods (US$4.28 billion), ahead of India (US$1.81 billion) and the United States (US$1.75 billion). Nonetheless, economists had expected a much more significant increase in exports.
The Finance Ministry has also faced criticism for a series of incidents perceived as stymying commerce, following complaints of seemingly erroneously hefty fines levied on some Indonesian firms and individuals attempting to receive goods from overseas.
One was that of Radhika Althaf, a keen soccer player who reportedly incurred 31 million rupiah (US$1,900) in customs duties for a pair of boots he bought from overseas that cost just a fraction of the eventual tax.
In another case, a December 2022 delivery of braille keyboards from South Korea to a school for special needs children in Indonesia was reportedly held up for more than a year because the recipient had been unable to pay 361.03 million rupiah in customs duties.
In April, former World Bank managing director Mdm Sri Mulyani released a statement on Instagram to address the issues, promising to improve the customs service to better protect law-abiding consumers and businesses.
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