Indonesia to impose anti-dumping duties to prop up rupiah

Indonesia will introduce a series of regulations, including interim anti-dumping duties, to help cut its current account deficit and strengthen its weakening currency, the finance minister has said.

Under the new rules, the finance ministry will be permitted to impose a temporary tax on imported goods suspected of being sold below fair market value. That allows the ministry to move against anti-dumping instantly, instead of waiting for the trade ministry to complete its analysis.

However, officials refused to say which imported goods could be targeted.

Finance minister Bambang Brodjonegoro said on 10 March: "The condition currently is stable, maintained, but despite that, we in the government always watch the movement of the rupiah and of course we have to make policies to strengthen the currency," adding that the regulations will tackle the current account deficit (CAD) problem in Southeast Asia's largest economy.

The rupiah slid to 13,090 against the US dollar on 10 March, the lowest since August 1998.

Capital Economics said in a 9 March note to clients: "The fragile five have been whittled down to three as economic reforms have helped to reduce the vulnerability of the Indian rupee and Indonesian rupiah to the recent bout of emerging market currency weakness.

"But the Brazilian real, Turkish lira and South African rand will remain particularly vulnerable to periodic sell-offs as we edge towards a first interest rate hike [by the US Federal Reserve]."

Anti-dumping probes

At present, Indonesia's trade ministry is probing the alleged dumping of cold rolled stainless steel from China, Thailand, South Korea, Taiwan and Singapore; and the possible dumping of polyethylene products from China, India and Thailand.

The central bank has said that a CAD of 3% of gross domestic product (GDP) this year will be acceptable. Indonesia's CAD has, at times, hit 4% of GDP, which has put pressure on the rupiah.

Indonesia's CAD narrowed to 2.95% of GDP in 2014 from 3.18% the preceding year.