Improving indicators leave Habibie hopeful of recovery

JAKARTA (JP): President B.J. Habibie expressed optimism on Wednesday that the economy was on track for a recovery from the year-long economic crisis because of considerable improvement in inflation and exchange rate indicators in recent months.

He said the inflation rate during the first two weeks of this month was minus 0.7 percent, well below July's level of 8.5 percent.

"July's inflation was horrifying. But inflation declined to 6.5 percent in August, then to 3.7 percent in September, then to minus 0.7 percent during the first two weeks of October," he said in a cheerful tone.

Habibie was speaking at the opening ceremony of the five-day National Merchandise and Commodity Show (Resource Indonesia '98).

He said he was encouraged by the recent strengthening in the rupiah.

"This morning (yesterday) the rupiah was at Rp 7,050 per U.S. dollar," he said, adding that the new level represented a 40 percent appreciation from July's exchange rate.

"The appreciation is a blessing from God and the result of hard work by all of us, including demonstrators, because demonstration is part of democracy," he said.

The rupiah has consistently followed an upward track in recent weeks, closing at Rp 7,150 to the dollar on Wednesday, compared to more than Rp 11,000 last month and around Rp 17,000 in May and June.

The rupiah traded at around Rp 2,450 in July last year before the crisis began.

The consumer price index, the main measure of inflation in the country, rose by only 3.8 percent in September, well below increases recorded in the preceding months. Inflation between January and September this year now stands at 75 percent.

Bank Indonesia Governor Sjahril Sabirin said recently that inflation should continue to decline in the coming months on the back of the strengthening rupiah and stabilizing food prices. He also said that he expected inflation to be "zero" in October.

Habibie called on the business community to proactively seek overseas markets for their products in response to a shrinking domestic market.

The five-day trade fair, which features more than 800 exhibitors, comes at a time of increasing optimism among those involved in the country's export industry.

The textile industry association has predicted an increase of at least 2 percent in total exports this year to US$7.45 billion.

"This is quite significant because textile and garments are the largest non-oil and gas foreign exchange earner and the sector is one of the country's largest employers, providing jobs to around five million people," commented M. Manimaren, president of the Texmaco apparel group, which is one of the companies exhibiting its products this week.

Manimaren agreed with export projections made last week by Irwandy Muslim, the secretary-general of the Indonesian Textile Association, saying that "the economic crisis has forced us to be more aggressive in selling overseas."

"The confirmation that more than 3,500 foreign buyers will be visiting this expo is another indication of an imminent and strong recovery in our exports, especially those in the textile industry," he added.

Citing his own group's performance as an example, Manimaren said Texmaco had been receiving closer attention from its major overseas buyers in Europe and the United States, including importers with such well-known trademarks as Ralph Lauren, Tommy Hilfiger, Liz Clairborne, Van Heusen, Jones Apoparel and Levi Strauss.

"Bolstering exports is the only way out of this economic crisis and the best means of settling our foreign debts," he added.

The Texmaco apparel group is a unit of publicly-listed Polysindo Eka Perkasa, Indonesia's largest integrated polyester textile industry, which manufactures products ranging from purified terephthalic acid, polymer, staple fiber, filament yarn, to fashion fabrics and garments.

Manimaren said there was a bright outlook in the sector, especially for companies making textiles and apparels from synthetic fiber because the main material in their manufacture -- natural gas -- is abundantly available in the country. (prb/rei)