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NEW VISA POLICY TO AID RUPIAH

Posted on April 09, 2015 on 19:46:49 WIB

The government will waive visa requirements for 30 countries as early as next month to boost the country's foreign exchange income from the tourist industry, as President Joko "Jokowi" Widodo broadens the size of his economic package to support the ailing rupiah.

Tourism Minister Arief Yahya said on Monday that the revision of the visa-free list could attract at least 1 million new foreign tourists to the country and an additional foreign exchange income of US$1.2 billion on the assumption each tourist spent $1,200 during his or her stay.

"This free-visa policy is our effort to boost the number of foreign tourists," Arief said. "We hope to improve our services to foreign tourists, who will soon not have to worry about visa requirements anymore," said Arief after a meeting at the Presidential Palace.

The new visa-free policy, which was initially set for China, Japan, South Korea and Russia only, has been extended to 30 countries including Canada, Mexico and the US, according to Arief.

Also included on the list are European countries such as Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, the Netherlands, Norway, Poland, Spain, Sweden, Switzerland and the UK, in addition to South Africa and Middle Eastern countries such as Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE).

New Zealand is also on the list, but not its close neighbor Australia, whose relationship with Indonesia has recently deteriorated amid the imminent execution of two Australian drug convicts on Nusakambangan prison island in Cilacap, Central Java.

Tourists from these countries are currently still required to pay $35 for visa-on-arrival fees for a 30-day stay in Indonesia.

"It's not that we do not want to include Australia," Arief stated.

"Australia applies a universal visa policy, which requires all people coming to Australia to possess a visa, including Indonesians. Therefore, a reciprocity principle applies here in Indonesia."

Indonesia currently exempts visa requirements for citizens of the nine ASEAN member countries as well as Chile, Ecuador, Hong Kong, Macau, Morocco and Peru.

The number of foreign tourist arrivals last year rose by 7.19 percent to 9.44 million, up from 8.8 million in 2013, with tourists spending more than $10.5 billion on accommodation and leisure activities, according to the Central Statistics Agency (BPS).

This year, the ministry hopes to attract around 10 million foreign visitors and more than $11 billion in earnings.

The policy is expected to slightly narrow the current-account deficit — the major worry of foreign investors that has sparked bearish sentiment on the rupiah — which stood at $28.4 billion throughout last year.

The meeting at the palace also discussed possible structural reforms in the economy, including tax incentives for the shipping and railway sectors, in a bid to push down the country's logistics costs, as well as the imminent implementation of an antidumping duty to rein in imports.

To further reduce oil imports, the government will also proceed with its plan to raise the mandatory blending requirement of biodiesel — a more environmentally friendly type of fuel that utilizes palm oil — from the current 10 percent to 15 percent.

The government is also preparing to give tax allowances to foreign companies that reinvest their earnings in Indonesia, as well as for local industries that export at least 30 percent of their total production.

"What's new this time is the fact that the criteria [for companies to be eligible for tax incentives] will not be as strict as previously," Finance Minister Bambang Brodjonegoro said.

The Jokowi administration has introduced the series of fiscal policies and a visa-waiver package in an effort to support the under-pressure rupiah, which has become Asia's worst-performing currency this year, over fears of a further deterioration in the current-account deficit.

Despite the planned economic reforms, however, the rupiah has so far continued its slide, weakening by 1.3 percent since the policy package was first introduced on March 10, with the currency trading at 13,237 per dollar on Monday, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).

Source: The Jakarta Post dated 17 March 2015

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