Indonesia's mineral ore export ban, imposed on Sunday, shouldn't worsen the nation's already worryingly high current account deficit, analysts told CNBC.
The long-awaited ban, which policymakers hope will boost profits from its mineral sector by forcing miners to process their ore at home before export, was announced by President Susilo Babang Yudhoyono on Sunday.
The ban specifically targeted the nickel and bauxite industries - worth more than $2 billion in annual shipments - as last minute changes excluded exports of copper, iron ore, lead and zinc concentrates, providing reprieve for U.S. mining giants Freeport and Newmont which produce 97 percent of Indonesia's copper.
The move comes at a time when foreign investor confidence in Indonesia is already fragile, after the fallout from speculation about a tapering of the Federal Reserve's asset-purchase program earlier this year put the spotlight on Indonesia's high current account deficit - 3.8 percent of gross domestic product in the third quarter of 2013 - and battered its currency to historic lows. Some analysts fear the drop in foreign revenue could widen the current account deficit further.
But Suryo Sulisto, chairman of the Indonesian Chamber of Commerce and Industry, told CNBC on Monday he believed the move would be beneficial for Indonesia's current account deficit in the long term.