Money moves to a more profitable source. United States (US) is a country that becomes a magnet for the owners of money to invest funds.
After recovering from the crisis in 2009, the Bank of America gradually began to raise interest rates.
Not only that, President Trump also lowered its tax rates from 35 percent to 21 percent. Coupled with investment in the US also provides increased yields or yields as the yield of US bonds with tenor of 10 years penetrate 3 percent and is predicted to reach 4 percent in 2019.
This is increasingly attracting many investors to transfer funds to America.
Coupled with the uncertain situation of the trade and geopolitical war of the region that caused the rise in world oil prices, more and more capital owners are rushing their funds back to America.
As a result, there is a lot of weakening of the exchange rate against the US dollar in some countries. This attenuation of value is different, influenced by several factors, among others fiscal health and monetary stabilization.
How about Indonesia?
In general, Indonesia's fiscal condition is in good health, as reflected in the management of the state budget until June this year. The budget deficit is smaller when compared to last year so that the primary balance is expected to survive a surplus as in May that surplus of 18.1 trillion.
The decline in budget deficits also led to a decrease in financing through debt without having to cut state expenditures.
A surplus primary equilibrium also shows the government's ability to repay debt without repaying debt. Similarly, economic growth, estimated to still be achieved more than 5 percent.
From the monetary side also Indonesia is still relatively stable. Inflation this year is estimated to be around 3 percent on target. Even during Ramadan and Idul Fitri festivities that usually lead to significant price increases, inflation until the end of June 2018 remains under control.
Bank Indonesia has also raised interest rates to compensate for the Fed's policy. Although considered progressive, with three increases over two months, this policy is sufficient to control financial markets.
To keep moving the market, BI relaxes the home mortgage rules by revising the loan to asset ratio rules.
Continue to weaken
However, since early 2018, the rupiah has weakened. So, what exactly is the cause of depreciation of the rupiah against the dollar?
On the weekend of June 6, 2018, the rupiah closed at 14,370 levels year on year to 5.58 percent. What distinguishes between Thailand (less than 2 percent) and Malaysia (up 0.1 percent) is a large current account deficit in our country.
This deficit is the difference between our larger imports and exports. In the first quarter, Indonesia experienced a deficit of about 2.2 percent of GDP. As a comparison, Malaysia surplus 3.2 percent and Thailand surplus 10.2 percent.
However, Australia also suffered a current account deficit, but did not have a major impact. What is the difference?
The difference seen is the presence of direct investment (Foreign Direct Investment / FDI) is quite large. While investment into Indonesia is mostly in the form of capital investment in the portfolio so that can go at any time to the sugar more.
Government steps
Is the government silent and allowing this? Certainly not.
Various efforts ease in starting a business for foreign investors has been done. Indonesia has been regarded as the top 10 reformers as the best country in the world to reform "Ease of Doing Business".
In the future, the President has also launched a massive reform in licensing through Online Single Submission (OSS). Electronically integrated licensing is expected to trim complicated, slow, widespread permissions across various work units so that it becomes faster and concise.
The system is expected to also be integrated to the local government level. This policy is expected to increase direct investment and can be sustainable with government policies that have provided tax incentives to entrepreneurs with large investment value.
Then how to overcome the fluctuation of trade balance deficit?
The government has thought to increase foreign exchange earnings through the tourism sector and increase exports on certain products and control imports of consumer goods.
Top tourist destinations continue to be encouraged to boost foreign exchange. Ahead of the World Bank and IMF Annual Discussion in Bali, some tourist destination infrastructure is improved and enhanced.
In terms of imports, in recent months, the largest imports were recorded in the fuel and capital goods sectors. This is where the need to increase the use of bio-fuel such as palm oil derivative products as a replacement of non-renewable energy.
This situation can also be regarded as blessing, in the midst of export restrictions in Europe, the government can increase the use of palm oil products for the benefit in the country.
For capital goods, it can still be tolerated because most of the goods are supporting infrastructure development such as power station supporting equipment and transportation equipment (LRT, MRT, Airport).
All of the above efforts require cooperation, support and coordination with many stakeholders in both the public and private sectors. The central government can not be alone in handling OSS, but it must also be supported by local governments.
Increased exports may also involve the Indonesian diaspora as a party who knows the products needed in the country of residence. Consumer goods control must also involve private parties, need good communication to avoid unrest in the community.
Indonesia must universally rise up for the prosperity of its people. The government can not alone work. Society also can not alone move. All must unite.
Current conditions can be a momentum to jointly rise to become a great nation, a respected Indonesian nation.