Last week, Rajasa informed that the third policy package aims to curb Indonesia's current account deficit by making it more attractive for foreign businesses (through tax incentives) to re-invest their profits in Indonesia. Although Basri did not mention a deadline for implementation of the new policy package, Rajasa stated last week that he expects it to come in effect in the first quarter of 2014.

Through prudent fiscal management, the Indonesian government managed to reduce the wide current account deficit to a sustainable level of below three percent of GDP. As inflation has eased and the rupiah shows a strong performance since the start of the year, many analysts say that Indonesia has escaped from the ranks of the fragile five (Brazil, India, Indonesia, South Africa, and Turkey). This term, introduced by Morgan Stanley, refers to the over-reliance of these five countries on foreign capital.

When more details about the third policy package are known, it will be reported on our website.

Further Reading:

1st Package: Indonesian Government Releases 'Emergency Plan' to Support Economy
2nd Package: Indonesia's New Fiscal Policies to Curb Imports and Support Exports