Exporters told to focus on U.S., EU

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)