Exporters spared selling dollars to BI

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)