Improving indicators leave Habibie hopeful of recovery

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)