Exporters spared selling dollars to BI

JAKARTA (JP): Bank Indonesia will not require the country's exporters to sell their U.S. dollar revenue to the central bank in an effort to bolster the beleaguered rupiah, its director said yesterday.

Dono Iskandar, speaking following the launching of the Indonesian Debt Restructuring Agency (INDRA), said use of such a requirement would only deplete foreign investors' confidence in the country.

The government will keep its free foreign exchange regime because alterations would not provide any benefit, he explained.

"We already have experience with a closed forex regime. The result was not encouraging because there were many leakages through over-invoicing and under-invoicing."

Over invoicing is a markup in the value of imports; under- invoicing is the opposite through reporting a lower export value than what is realized.

Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Aburizal Bakrie asked President B.J. Habibie last week to require exporters to sell their dollars to BI to boost the country's foreign exchange reserves and resuscitate the ailing rupiah.

He contended the government would easily raise US$50 billion annually through the mechanism, pointing to the country's monthly export value of between $3.5 billion and $4.5 billion.

The rupiah has been under severe pressure over the past year, plunging to about Rp 13,000 to the U.S. dollar last week from Rp 2,450 in the precrisis period in July.

The currency crisis has caused severe difficulties to the economy as most industrial raw materials are imported. Many companies are now technically bankrupt due to high overseas debt.

The government expects the rupiah to strengthen to about Rp 10,000 by the end of this year, following the agreement by foreign donors late last month to provide the country with more than $14 billion in foreign aid.

Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said in Paris last week following the meeting with the Consultative Group on Indonesia creditor countries that part of the foreign aid would be used to buy rupiah from the market to finance various government programs.

Dono also said that if the INDRA debt restructuring scheme works, pressure on the rupiah would diminish as the massive $34 billion debt due this year would be stretched over eight years, including a three-year grace period. (rei)