Rupiah weakness hurting manufacturing: Kadin<\/p>\n
JAKARTA (JP): Chairman of the Indonesian Chamber of Commerce
\nand Industry (Kadin) Aburizal Bakrie said on Monday that if the
\nrupiah continued to stay at about Rp 9,000 per U.S. dollar, the
\ncountry's manufacturing sector would have to cut production in a
\nbid to halt losses.<\/p>\n
Aburizal said that the ideal exchange rate level for the
\nmanufacturing sector was about Rp 7,000 per dollar.<\/p>\n
He explained that a weak rupiah would result in higher costs
\nof imported raw materials, which could not be automatically
\ntransferred to local customers as purchasing power had been
\nreduced by the more than two-year economic crisis.<\/p>\n
\"The drop in the rupiah to about Rp 9,000 is really hurting
\nthe business sector,\" he said.<\/p>\n
Aburizal was speaking to reporters at the House of
\nRepresentatives. He was scheduled to meet with House Commission
\nIX for the state budget and banking, but the hearing was delayed
\nas only a number of the commission members showed up.<\/p>\n
The rupiah has been badly hit recently, particularly due to
\ndomestic security and political uncertainty ahead of a key August
\nGeneral Session of the People's Consultative Assembly (MPR), the
\ncountry's highest legislative body.<\/p>\n
Many fear that the House and MPR members will use the annual
\nmeeting to impeach the President, who has in recent months been
\nengaged in a tug of a war with the legislators.<\/p>\n
The rupiah ended stronger at Rp 9,315 per U.S. dollar late on
\nMonday, compared to Rp 9,320 on Friday. This is much lower than
\nthe government's Rp 7,000 target for this year.<\/p>\n
Coordinating Minister for the Economy, Finance and Industry
\nKwik Kian Gie said late last week that the government and Bank
\nIndonesia would not take any special action to prop up the rupiah
\nbecause the current weakness was only temporary and due to
\n\"noneconomic factors\".<\/p>\n
\"If we take action, it will only cause the market to think
\nthat there's something serious going on,\" he said.<\/p>\n
Kwik was confident that the rupiah would be stronger once
\ncurrent political problems had been resolved, as the country's
\neconomic fundamentals had improved.<\/p>\n
Aburizal also urged the House to immediately take measures to
\nensure legal certainty for investors to do business in the
\ncountry.<\/p>\n
He said that the illegal seizure of company assets, including
\nland, by the people could prompt investors to withdraw from the
\ncountry.<\/p>\n
\"There has to be an industrial peace,\" he said.<\/p>\n
He said that legal certainty and the security condition were
\ncrucial to reviving business confidence in the country and to
\nhelp strengthen the local currency.<\/p>\n
Aburizal was optimistic that if domestic social and political
\nuncertainty subsided, the rupiah would strengthen again.<\/p>\n
He said that the country's key economic factors were positive
\nenough to support a stronger exchange rate of the rupiah.<\/p>\n
He expected the rupiah to strengthen after August's MPR
\nsession.<\/p>\n
Elsewhere, Aburizal also said that the Indonesian Bank
\nRestructuring Agency (IBRA) must press ahead with its asset
\ndisposal program to help revive investor confidence in the
\neconomy.<\/p>\n
\"IBRA must speed up its asset sale program,\" he said, adding
\nthat the government should not be reluctant to sell at a
\ndiscount.<\/p>\n
He added that a resolution to the country's massive corporate
\nsector overseas debt was crucial to rebuilding confidence.<\/p>\n
He also said that the government's economics team must be well
\ncoordinated in taking economic measures to revive confidence,
\nparticularly among foreign investors. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-weakness-hurting-manufacturing-kadin-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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