Exports remain uncompetitive despite crisis
Exports remain uncompetitive despite crisis
JAKARTA (JP): Indonesia's exports have remained uncompetitive
overseas despite the sharp drop in the rupiah's value against the
U.S. dollar, an executive has said.
The chairman of the Association of Garment Suppliers, Poppy
Dharsono, blamed yesterday the poor performance of the country's
exports on inconsistent government export policies.
"From what I observe, the government focuses too much on
currency issues, instead of using the fall in the rupiah as a
momentum to strengthen our exports," Poppy said after an
economics seminar.
"There are plenty of opportunities now and they might not come
again," she said.
She said the government lacked "business sense" and had
established ineffective economic policies.
She cited the government's recent plan to establish a currency
board system, which would peg the rupiah to a foreign currency at
a fixed exchange rate, as an example of the government's poor
business judgment.
"Before we ever establish such a board we must improve not
only our banking sector, but also our real sector to increase our
foreign exchange reserves," she said.
Poppy said the government has not paid enough attention to the
real sector, businesses outside of the finance sector, since the
crisis began last July.
She explained that garment suppliers, for example, were
burdened by the fact that they have to pay for their raw
materials in dollar-denominated cash, although the materials were
locally made.
The raw material suppliers are seen as unreliable because
deliveries often come later than the promised date, she said.
Some garment companies pay extra for their materials to be
shipped by air in order to receive them on a timely basis.
"Materials are now locally made, but we may as well import
them rather than spend dollars on locally made products which are
often delivered late," she said.
The situation has caused many garment producers to go
bankrupt, especially those with revenues in rupiah, because they
cannot afford to pay for their materials in dollars, she said.
Many garment companies need additional working capital to buy
new material because their existing supplies will only last until
April, she said.
"The profit margin of garment suppliers is very small. Our
profit is about 6 percent to 7 percent of our revenue, because if
we try to make larger profits, we would lose business to other
countries such as China," she said.
The crisis should provide an opportunity for export
businesses, but the appreciation of the dollar by over 300
percent against the rupiah has made raw materials very costly,
she said.
The government also has burdened exporters and importers with
high taxes and import duties, while its officials have often
collected illegal levies from the companies, she added.
The government should focus its attention on efforts to boost
exports, Poppy said. (das)