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Mon, 02 Jun 2003

JP/First-quarter export confidence index down

First-quarter export confidence index down

The Jakarta Post, Jakarta

The country's export confidence index in the first quarter of 2003 took a nosedive to -3.0 from 10.0 in the fourth quarter of 2002, as many companies missed their revenue targets, a survey reported.

Carried out by courier service DHL and consultancy firm Castle Asia, the survey noted that the short-term confidence index level was the lowest since the survey started in early 2002, and that more than 50 percent of exporters missed their revenue targets during the first quarter.

"However, many companies expect this decline to be short- lived, with 58 percent still expecting to meet their annual revenue targets for 2003," the survey said, the results of which were provided to The Jakarta Post late last week.

More than 50 percent of exporters believed that the appreciation of the rupiah against the U.S. dollar affected export sales, while 56 percent said the cost of raw materials was another major factor.

"Their exports become uncompetitive at an exchange rate stronger than Rp 8,500," it said. Around 40 percent of respondents expected an exchange rate of between Rp 8,500 and Rp 9,000 at year's end, while 37 percent expected a rate of between Rp 9,000 and Rp 10,000.

In regards the rising cost of raw materials, 40 percent of respondents expected an 8 to 10 percent cost increase, 23 percent predicted an 11 to 13 percent increase and 33 percent expected a maximum increase of 8 percent.

Apart from the exchange rate and the cost of raw materials, 33 percent of exporters believed that unstable international political and economic conditions had an obvious impact on sales, while 77 percent deemed domestic political conditions an important factor.

In dollar terms, 58 companies expected export prices to remain stable for the next three months.

Southeast Asia (excluding Singapore) remains the main export market, with 57 percent of surveyed firms exporting to the region. Other important markets include Western Europe, Japan, Singapore, the Middle East and North America.