Exporters pessimistic on Q3 outlook: Survey

The Jakarta Post, Jakarta

The country's exporters are pessimistic that they will be able to increase export volumes in the third quarter of this year, a survey has revealed.

The pessimistic tone was induced by a weak performance during the second quarter.

"Some 38 percent of the respondents agreed that they failed to meet revenue targets in the second quarter.

"This led to the drop in the exporters' third quarter confidence index from 32.5 -- at the beginning of the second quarter -- to 27 percent," consultant firm Castle Asia and U.S. delivery firm DHL said in a joint report released on Thursday.

The survey was carried out in July and covered some 200 leading export companies in Indonesia.

The report did not clearly outline the main reasons for the dismal export performance in the second quarter, but said that the cost of raw material and the exchange rate were two important factors affecting export sales.

The rupiah strengthened against the U.S. dollar during the first six months of this year. Experts have said that the appreciation of the local currency would make the country's export products less competitive compared to the products of competing countries whose currencies did not appreciate as quickly as the rupiah.

Experts have said that various uncertainties at home plus the current global economic slowdown were slowing down Indonesia's exports.

However, the gloomy outlook will be likely short-lived, the report said.

It is expected that the confidence index will rise next year from 32.1 to 37.1, on the back of a global economic recovery and a competitive exchange rate of between Rp 8,000 and Rp 9,000 to the dollar.

Exporters were upbeat about an increase in export sales to China, Western Europe and Korea, the survey said.

It added that exporters were also eager and optimistic to export products and services to the U.S. and Canada, but African and Middle East markets were still out of the question.

Exporters also said that an exchange rate stronger than Rp 8,500 would make the country's export products less competitive.

Some 50 percent of the respondents said that the currency exchange rate was an important factor affecting export performance.

In regard to the labor conflict issue, the survey said that 68 percent of the exporters who were surveyed said they were "neutral" on the labor problem issue.

Only 12 percent said they were very concerned about the labor problem here.