Djamaludin urges timber firms to unload dollars

Djamaludin urges timber firms to unload dollars

JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo
asked timber and other forest-related companies yesterday to
unload their American dollar holdings to help cool down the
dollar rush.

Djamaludin said selling dollars would help stabilize the
rupiah, which had dropped by over 35 percent since early January
this year due to selling pressure from overseas fund managers and
local companies.

Many local companies were reported to have bought the dollar
not only to finance their imports or offshore loans but also to
hedge their funds from a further drop in the Indonesian currency.

"I suggest that forestry firms, with an excess of dollars,
unload the currency," he said.

The minister said the action followed Bank Indonesia's move
last week to provide swap facilities to export companies.

The move, which would allow export companies to buy or sell
dollars through the central bank under forward transactions, was
apparently made to shore up the weak rupiah. But analysts said
that such a monetary maneuver was not enough.

In addition, the forestry minister also encouraged timber
companies to use rupiah in the sale of their products in the
local market.

He said using the dollar as a reference in domestic
transactions no longer made sense due to the volatility of the
American currency.

Timber companies, which mostly export their products, use the
dollar rate when selling their products in the domestic market.
The companies, whose earnings are mostly in foreign exchange,
also pay their royalties or other obligations, such as their
monthly contribution fee to the country's reforestation program,
in dollars.

But Djamaludin said he was waiting for President Soeharto's
approval to change the payment into rupiah.

"The change will ensure certainty for timber companies and
also encourage the forestry sector's exports," he said.

The ministry currently charges a reforestation fee of $15 per
cubic meter of timber.

Director General of Forest Utilization Titus Sarijanto said
the change in the reforestation fund would be valid in new
payments.

Unpaid contribution fees from previous months would still be
charged in dollars.

Titus said the ministry had placed around Rp 1.2 trillion of
the reforestation fund into Bank Indonesia's short-term SBI
papers.

The central bank asked government-related institutions last
month to put their money into its short-term papers to help
squeeze economic liquidity as part of its measures to stabilize
the rupiah. (08)