Potential impacts of redenomination: a business perspective

Redenomination discourse has been prominent in Indonesia recently. However, it takes "guts" of the Indonesian government to implement. Redenomination potentially strengthens exchange rate and reveals real economic conditions, but it also leads to hyperinflation. Addressing this issue, this study surveyed 161 business people (the owners and managers) in Indonesia from a variety of industries of various scales in order to explore potential impacts of redenomination from a business perspective. A six-scale measure was used in the questionnaire to avoid the central tendency. This study indicates that a strong comprehension of the redenomination policy appears to be a major success factor of redenomination in Indonesia, with business readiness being an intervening variable. An understanding of redenomination significantly affects business readiness to survive with redenomination. Furthermore, the business readiness significantly affects perceived macro and micro impacts of redenomination. At the macro economy level, business people assess that the Indonesian economy would be better in terms of price and exchange rate. At the level of the micro economy, business people assess that redenomination facilitates simpler recording of financial transactions and encourages more dynamic business and increased productivity