High housing costs raise inflation

JAKARTA (JP): Higher housing prices in October brought the country's inflation level close to 10 percent in the first 10 months of this year, causing concern to the government which just raised electricity rates by 7.68 percent.

"The inflation, which fell from 0.89 percent in August to 0.53 percent in September, rose again to 0.89 percent last month, bringing the cumulative inflation in the January-October period to 8.27 percent," Minister of Information Harmoko told reporters after a cabinet meeting at the Bina Graha presidential office here yesterday.

"President Soeharto has ordered all government institutions to improve coordination to curb rises in consumer prices so that inflation will not reach 10 percent this year," the minister said, adding that facilities for goods transportation, for example, should be improved to expedite distribution.

Harmoko explained that last month's high inflation was caused mainly by the average increase of 1.4 percent in housing prices in the capitals of the country's 27 provinces. The prices of food rose by 0.84 percent, clothing by 0.47 percent and other goods and services by 0.44 percent.

The increases in housing costs were led by the surge of cement prices in a number of provinces, where construction activities increased during the prolonged dry season. Cement production and imports could not meet the rising demand.

The minister acknowledged that the domestic cement producers are not likely to be able to meet the rising demand until 1997, when a number of companies will have substantially increased their production capacities.

Yesterday's meeting, which was attended by Vice President Try Sutrisno, economics ministers and senior economics sector officials, also reported a 14.5 percent increase in the money supply to Rp 42.4 trillion (US$19.4 billion) as of September from Rp 37.03 trillion as of the end of last year.

Exports

Harmoko said Indonesia's exports slightly increased to $3.56 billion in August over $3.5 billion in the previous month. However, because its imports rose to $2.72 billion from $2.68 billion, its trade surplus fell to $840.3 million from $884.6 million.

The August exports consisted of $2.71 billion in non-oil products and $855.6 million in oil and gas, he said.

Cumulatively, the country's exports were recorded at $25.49 billion, of which $19.27 billion was contributed by non-oil products and $6.22 billion by oil and gas, while its imports reached $20.12 billion, he said.

"The country, therefore, gained a trade surplus of $5.36 billion in the January-August period," he said.

On tourism, Harmoko said that the number of tourist arrivals in Indonesia during the first nine months of this year increased by 18.2 percent to 2.45 million over the same period of last year, with total foreign exchange spending of about $2.88 billion.

In September alone, the number of tourist arrivals increased by 19 percent to 292,502, he said.

"We expect that the number of tourists visiting Indonesia this year will reach four million, as compared to last year's 3.5 million," he said.

Harmoko said the meeting also discussed a plan to offer a 25 percent discount on telecommunication billing rates to participants of and journalists covering the meetings of the Asia Pacific Economic Cooperation (APEC) forum in Jakarta and Bogor, beginning next week.

"A total of 5,184 hotel rooms in Jakarta have been prepared for the participants and journalists, whose number will likely reach 4,274," he said.

He said eight hotels in Jakarta will be used to accommodate the heads of state taking part in the APEC Economic Leadership Meeting. (riz)