Exporters told to focus on U.S., EU

JAKARTA (JP): Indonesian export companies should focus on the expanding United States and the European Union markets, says an economist.

Dorodjatun Kuntjorojakti, a senior economist at the University of Indonesia, told members of the Chamber of Commerce and Industry yesterday the appreciation of the U.S. dollar and European currencies would further fuel economic activities of those countries.

"The strength of the U.S. and the European Union's currencies will boost those countries' economies for a long period of time," he said.

The European Union includes Germany, France, Italy, the United Kingdom, Spain, Sweden and the Netherlands.

Dorojatun said the United States would remain the most competitive economy in the world, he said.

At the same time, Europe's economic growth would be as rapid, as they could adjust to the rocketing greenback, he said.

Dorojatun said the United States' success in leading the world economy this decade was because most of its cash flow was generated from its industrial and manufacturing sectors rather than from its finance sector.

In Indonesia, it was the other way around, he said. "Indonesia must be able to shift from the financial sector to the real sector," he said.

To boost the real sector (non-finance sector), Bank Indonesia would have to inject fresh funds into the economy by buying more money market securities (SBPUs) from financial institutions.

The central bank recently reopened SBPU trading to certain banks after closing it last August in a bid to drain liquidity.

By buying more SBPUs, Indonesia could have a benchmark for mid-term loans, and it could be the base for the Jakarta Interbank Offered Rates, he said.

Touching on the International Monetary Fund's bailout program, Dorodjatun said that he was optimistic that the financial assistance would help restore confidence in Indonesia's battered market.

He said that Indonesia could use only $6 billion of the $40 billion in standby loans pledged under IMF bailout program and bilateral arrangements if Indonesian funds deposited overseas could be repatriated.

During the meeting, Dorodjatun said that many local companies moved their funds overseas fearing a continued fall in the rupiah. (das)