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)