BI plans to lure export earnings back home<\/p>\n
JAKARTA (JP): Bank Indonesia (BI) will provide exporters
\nincentives to lure their billions of dollar earnings parked
\noverseas back home, acting governor of the central bank Anwar
\nNasution said on Thursday.<\/p>\n
Anwar said the central bank planned to provide, among other
\nthings, an export swap facility to encourage exporters to
\nrepatriate their dollar earnings to support the rupiah.<\/p>\n
\"Exporters want a certain assurance that the rupiah will not
\nweaken once they bring their dollars back,\" Anwar said following
\na meeting with major exporters.<\/p>\n
The meeting was convened at the initiative of the National
\nBusiness Development Council (DPUN) to discuss efforts to shore
\nup the rupiah, which has remained weak despite a robust increase
\nin exports.<\/p>\n
The central bank chief reassured exporters at the meeting that
\nthe government had no any intention of imposing capital controls
\nand would stick to the free-floating system for the rupiah.<\/p>\n
He said that under the export swap facility exporters would
\nnot be subject to the risk of rupiah fluctuation when they needed
\nto convert their dollar earnings into rupiah.<\/p>\n
The swap facility would allow exporters in need of imported
\nraw materials to buy dollars at the same rate as when they
\nexchanged them with rupiah, Anwar added.<\/p>\n
\"I asked them (exporters) to cooperate with the central bank
\nto help stabilize the rupiah.<\/p>\n
\"If you want a stronger rupiah, you need to increase export
\nearnings and bring them home,\" Anwar said.<\/p>\n
During the meeting, exporters raised their concerns to the
\ncentral bank about the 'credit crunch', as most banks have
\nvirtually stopped lending since the 1997 financial crisis, he
\nsaid.<\/p>\n
Anwar said exporters also complained about the refusal by
\noverseas banks to accept letters of credits opened at Indonesian
\nbanks.<\/p>\n
\"Many exporters therefore prefer opening their letters of
\ncredit at foreign banks, thus requiring them to park their export
\nearnings overseas,\" he added.<\/p>\n
Anwar also referred to jitters among foreign export companies
\nabout the possibility that the central bank might impose capital
\ncontrols in a bid to defend the rupiah, which last month fell
\nsharply to a 21-month low of almost Rp 9,500.<\/p>\n
\"I reassured them (foreign companies) that we don't have any
\nintention to adopt capital controls,\" he said.<\/p>\n
DPUN chairman Sofyan Wanandi said exporters usually keep some
\n20 percent to 30 percent of their export earnings in foreign
\nbanks.<\/p>\n
\"They bring back part of their export earnings only to finance
\nlocal costs,\" Sofyan added.<\/p>\n
The Central Bureau of Statistics announced on Tuesday that
\nIndonesia's export earnings in June reached a record high of
\n$5.29 billion.<\/p>\n
However, the boost in foreign exchange earnings did not help
\nstrengthen the rupiah. The local unit only rose slightly on the
\nback of easing political tensions.<\/p>\n
Sofyan said most large exporters and foreign companies
\noperating in the country kept their earnings abroad because of
\nthe still fragile condition of domestic banks.<\/p>\n
He said exporters had expressed their commitment to
\nrepatriating their dollar earnings if a swap facility was
\navailable and if the conditions of local banks improved.<\/p>\n
The existing swap facility, he said, was only available for
\ninvestment needs and its fee was also relatively high.<\/p>\n
Bank Indonesia therefore promised to soon introduce
\nexport swap facilities with a lower fee than that imposed on
\ninvestment swap facilities.<\/p>\n
\"Because exporters bring home dollars, BI can charge them a
\nlower fee,\" he said, adding that the fee might only be around 1
\npercent to 2 percent, compared to 10 percent to 15 percent under
\nthe investment swap.<\/p>\n
Sofyan said that some 70 percent of Indonesia's top exporters,
\nincluding foreign giants like copper and gold miners PT Freeport
\nIndonesia, were represented at the meeting. (bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-plans-to-lure-export-earnings-back-home-1447893297",
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