Indonesia seeks to calm investors after stocks, rupiah slide

By Stefanno Sulaiman

JAKARTA (Reuters) -Indonesian officials will seek to address concerns among investors and other key economic players about an economic downturn in Southeast Asia’s biggest economy following a stock market selloff and currency slump, an official said on Thursday.

President Prabowo Subianto will meet with investors and others following the long Eid-al-Fitr holiday, which begins on Friday, aiming to correct misperceptions about the government’s policies, said Raden Pardede, a special aide to Indonesia’s senior economic minister Airlangga Hartarto.

“The government will improve and intensify communication with economic players,” Raden told Reuters.

The rupiah has fallen to its weakest since 1998, following a slide of as much as 7.1% in the main stock index last week, pressured by concerns over government policy, the country’s fiscal position and its growth prospects.

Analysts mentioned poor government communication on fiscal policies and strategies to achieve growth as one of the selloff triggers, in addition to pressure on the market from negative global sentiment.

Key messages will include assurances that the government will not break the legal fiscal deficit ceiling at 3% of GDP and there will be no political interference in the newly set up sovereign wealth fund Danantara Indonesia, Raden said.

“We are also preparing ways to deregulate the real sector, mainly to encourage the manufacturing industry, which creates jobs and is export-oriented,” he said referring to a policy that seeks to make available 20 trillion rupiah ($1.21 billion) in credit for labour-intensive industries.

The government and financial authorities will also provide more investment instruments to attract investors and will ensure the quality of companies listed on the stock exchange, finance ministry spokesperson Deni Surjantoro told Reuters.