Not Happy, This Exporter Is Wary as the US Dollar Surges

Jakarta, CNBC Indonesia - The rupiah’s depreciation, which has breached around Rp17,600 per US$, is a serious concern for the national furniture and craft industry. In theory there are short-term gains for exporters because receipts denominated in dollars appear higher when converted into rupiah. But in practice, the impact is not that simple.

Cost pressures remain high as the industry still relies on imported components to support production. The currency rally ultimately adds to operating costs and compresses margins.

The Indonesian furniture industry remains dependent on various imported components such as hardware, chemical finishing, production machinery, spare parts, and other supporting materials, most of which continue to be priced in US dollars. As a result, the exchange rate rise has in fact raised production costs and squeezed margins.

At the same time, global economic conditions mean demand in export markets has not fully recovered. Many foreign buyers are said to be reluctant to expand purchases, so the high exchange-rate environment may not necessarily have a positive impact on sales.

Therefore HIMKI says this moment should be treated as an important warning to strengthen the national industry’s competitiveness on a fundamental level, not merely to enjoy short-term windfalls from the exchange rate.

Indonesia actually has a strong head start due to its rich timber resources and raw materials. However domestic supporting industries still need fortifying so that added value does not remain overly dependent on imports, including strengthening further industrialisation, such as processing semi-finished raw materials, components, engineered wood, and boosting machinery and the supporting industries domestically.

Amid exchange-rate pressures, industrial resilience cannot rely solely on movements in the US dollar. What matters more is the ability to build a strong, efficient, and globally competitive industrial ecosystem.