Exporters yet to benefit from rupiah's sharp fall
Exporters yet to benefit from rupiah's sharp fall
JAKARTA (JP): The sharp depreciation of the rupiah against the
U.S. dollar will not make Indonesian products more competitive
because of their high import content, an economist said.
Economist Sri Mulyani Indrawati of University of Indonesia
said that the sharp drop in the rupiah could not offset the
increase in the production costs stemming from the increase in
the capital spent importing raw materials.
According to the university's research, each time the rupiah
depreciates by 1 percent it should boost exports by 0.4 percent
to 0.6 percent.
But Indonesia's main exports, such as textile and textile-
related products and electronics, depend highly on imported raw
materials.
Speaking at a seminar on the prospects of Indonesian exports
in the free trade era, Sri said that besides the high import
content, the inefficiency of the country's industrial companies
was also due to the weakness of economic activities such as high
interest rates, a tedious bureaucracy and red tape.
China also has a laborious bureaucracy, high tariffs, and high
interest rates but its products are more competitive than
Indonesia's in the foreign market.
"China's exports have grown 25 percent as of September. It was
surprising because its products were more competitive than other
countries whose currencies had sharply depreciated," she said.
The monetary crisis, triggered by the defacto devaluation of
the Thai baht in early July, has caused a drop in the value of
the rupiah by about 60 percent against the U.S dollar.
She said that Indonesia should focus on improving its
resource-based industry, such as agribusiness which does not
depend on imported raw materials.
The director general of international trade, Djoko Moeljono,
said that despite the economic crisis, Indonesia's non-oil
exports reached US$30.82 billion -- or increased by 10.27 percent
as of September -- compared to the same period last year.
He said that the government expected the country's exports to
increase to US$43 billion in 1997 from $40.6 billion last year.
"We expect our exports will reach about US$50 billion next
year."
He said that the government has attempted to boost exports
during the economic crisis, such as allocating Rp 3 billion for
cheap loans to help export-oriented small and medium companies.
Indonesia's main non-oil exports include textiles and textile
products, garments, plywood, rubber, shrimp, copper ore, and
coal.
The country exports most of its products to Japan, the United
States, Singapore and European countries. (gis)