Low rupiah no boon for furniture makers
Low rupiah no boon for furniture makers
Suherdjoko, The Jakarta Post/Jepara
The plunge of the rupiah against the U.S. dollar has not
significantly affected the furniture industry in Jepara, Central
Java.
This stands in marked contrast to surges in the dollar in 1998
and 2000, which provided huge windfall profits for the Jepara
furniture industry.
"In the past few years, buyers have been purchasing furniture
in rupiah so that the rise of the U.S. dollar will not have much
effect on our earnings," said Afiatun, the owner of the Jati
Makmur furniture company.
Instead of reaping higher profits from the rupiah's slide, the
furniture manufacturers are likely to see lower profits this time
around, said Afiatun. "The price of timber and transportation
costs have increased over the past few years, thus reducing our
profit margins," said Afiatun.
Furniture producers had planned to increase the price of their
products on the back of raising production costs, but none of
them dared to do so as they were now facing stiff competition
from China and Vietnam, said Afiatun. The two countries had
expanding furniture industries and were able to produce good
furniture at low cost, she said.
Afiatun's firm normally ships between 10 and 12 containers of
furniture each month to various overseas countries, with each
container filled with furniture worth between US$18,000 and
US$20,000. "The business is in the doldrums. This month we only
sent two or three containers. We expect orders to increase in
September, however," Afiatun explained.
Meanwhile, the chairman of the Indonesian Furniture
Association's Jepara branch, Akhmad Fauzi, said that the plunge
in the rupiah would likely lead to an increase in exports.
"Overseas buyers will avail of the opportunity to buy more
furniture. With the same U.S. dollar, they can buy more
furniture. However, the windfall profits will be fleeting," said
Fauzi.
The furniture industry is big business in Jepara and employs
most of labor force in the regency, which has a population of
about 900,000.
The industry exported some US$140 million worth of furniture
to various destinations last year. However, Akhmad complained
that the business had been slow over the past two years. "Between
1998 and 2000, we dispatched some 1,200 containers a month.
Currently, we are only sending between 400 and 500 containers
abroad each month," said Fauzi.