A developed country tends to be identified with a strong and stable currency exchange rate. The United States through the Office of the US Trade Representative (USTR) at the World Trade Organization or WTO has removed Indonesia from the list of developing countries since February 2020. Thus, Indonesia has the title of being a developed country. Being removed from the list of developing countries of course has several consequences that must be faced by Indonesia. The impact of this policy will affect different and special treatment in terms of trade, namely the minimum threshold (de minimis threshold) for subsidy so that an anti-subsidy investigation can be stopped. The minimum threshold will be smaller. (Kompas.com 22/02/2020).
In addition, Indonesia will lose a lot of import facilities for a developing country. One of them is the loss of the Generalized System of Preference (GSP) or duty-free treatment to goods imported into the United States.
Another impact is on the Rupiah as a result of export-import trade transactions.
So, has the Rupiah been strong enough to compete internationally?
The government through the Ministry of Finance has issued Regulation of the Minister of Finance of the Republic of Indonesia Number 77/Pmk.01/2020 concerning the Strategic Plan of the Ministry of Finance for 2020-2024 (“Regulation 77/2020”). Regulation 77/2020 has a vision for the Ministry of Finance to become the Manager of State Finance to Realize a Productive, Competitive, Inclusive and Just Indonesian Economy. In order to achieve this main vision, the Ministry of Finance has proposed 19 (nineteen) Bills to be enacted into the 2020-2024 Mid-Term National Legislation Program and one of the bills that is currently being discussed is the Rupiah Redenomination ("Redenomination Bill").
Although it is still not certain that there will be a Rupiah redenomination, there have been cons against this government policy that will be executed by Bank Indonesia as the executor of this monetary policy. But there are also people who support this one thousand to one rupiah policy. According to Government calculations through Regulation 77/2020, this redenomination will provide economic efficiency in the form of accelerating transaction times. In addition, redenomination also creates efficiency in the quotation of prices for goods and services due to the simple number of digits in Rupiah. Simplification of the transaction and accounting system as well as Rupiah reporting because there are not many digits in the currency is also a justification reason for this redenomination plan. As another view from us as a law firm that upholds clean law enforcement, we are of the opinion that through this golden opportunity the government can trace Rupiah from corruption which is very difficult to trace. As the old currency is no longer valid, all Indonesian citizens will sooner or later exchange them for the latest currency if this redenomination occurs.
Although the objective of this policy looks quite convincing and promising, simplifying the value of a currency to be smaller will allow rounding up. For example, a transaction value of Rp. 15,682. If there is redenomination, the value will be Rp. 15.682. Next, there will be a rounding up from Rp. 15.682 to Rp. 15.70. It cannot be denied that the value of Rp. 15.70 can be rounded up to Rp. 16. With more frequent rounding up, it is likely that the prices of goods in all transactions will also increase. This can encourage inflation in Indonesia. For goods we should be able to buy for Rp. 15,682, we have to buy at Rp. 16. The same thing was also expressed by an associate at INDEF (Institute for Development of Economics and Finance), Bhima Yudhistira in an interview with Kompas TV who said that the prices of goods on the market would increase due to rounding up.
Ideally, a law created in Indonesia should not only provide legal certainty, but also provide justice and legal benefits and must also be upheld for all Indonesian citizens, as stated by Sudikno Mertokusumo. If this Redenomination Law is enacted, hopefully this law can provide fresh air to various sectors in Indonesia and not cause further social inequality. In addition, another concern is regarding the frequent overlapping of regulations in Indonesia which have a quite crucial impact and provide obstacles in acting and making decisions for business interests. Hopefully this will not happen if the Redenomination Law is enacted. Often the regulations issued by the government are rushed, causing the transition from one regulation to another to go awry. In the current situation, Indonesia needs an regulatory instrument that can generate and accelerate economic growth as a result of the impact of the unfinished Covid-19 pandemic. If the regulation regarding the Rupiah redenomination is enforced, the government should really consider carefully by conducting in-depth academic studies first. With the existence of redenomination, we believe that the government needs a large budget because there will be changes to the national transaction system, which includes the government and the private sector. It would be wiser if the Government could use this budget allocation for the acceleration and growth of the Indonesian economy as well as the maximum handling of the Covid-19 pandemic. INDEF Senior Researcher Enny Sri Hartati expressed the same concern. She explained that strategic policies must be issued in normal and stable conditions to minimize risks to the economy.
With the condition of the nation which is currently focused on facing the Covid-19 pandemic, hopefully any discussion of regulations that can have a big impact on the country's economy should be postponed for the time being, because this nation must first focus and prioritize on the safety and health of its citizens as a result of the Covid-19 pandemic.
Edbert Nugraha Aji Budiwiyono