Prudent business management essential: Tunky

Prudent business management essential: Tunky

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo
urged local entrepreneurs yesterday to manage their businesses
prudently in response to a less accommodating Indonesian economy.

"Don't expect things to return to the way they were during the
golden age," Tunky told members of the Chamber of Commerce of
Industry (Kadin) at a panel discussion.

The monetary turmoil, which has depreciated the rupiah's value
by about 50 percent against the U.S. dollar since early July, is
projected to slash the country's economic growth to 6 percent
this year and 5 percent next year from above 7 percent in
previous years.

Unlike in prior years, businesses would face difficulty
getting foreign loans, he said.

The tight monetary policy imposed by the government would also
make domestic loans more expensive.

Tunky said, however, the depreciation of the rupiah would make
Indonesian exports more competitive.

He was optimistic that exports would continue to increase next
year.

In the first semester of this year, the monthly balance of
payments had experienced a surplus of between US$450 million and
$500 million.

Export companies must consolidate and improve their operations
in order to increase their exports, he said.

The government also would continue to work to reduce imports
of raw materials for local companies by creating incentives for
the establishment of upstream and component industries.

The government would also lower sales taxes for domestic
transactions between exporters and the export-supporting
industry, he said.

However, the most important thing for the business sector was
to improve its liquidity, he said.

Asked whether the central bank would cut interest rates to
help export-oriented companies, Tunky said the government could
not subsidize the export sector, as it would violate World Trade
Organization regulations.

Indonesia had signed international agreements that it would
not subsidize its exports, he said.

If these rules were broken, importing countries would impose
countervailing duties on subsidized Indonesian exports, he said.

"The government and the business sector are working together
now to lower interest rates across the board," he said.

He said he had met with Bank Indonesia governor Soedradjad
Djiwandono and the directors of other banks to discuss problems
regarding export-oriented companies, he said.

He said export-oriented companies were urged to exchange their
dollar-denominated revenues with rupiah through the swap and
forward facility provided by the government.

The swap facilities would ensure that exporters would be able
to buy dollars at approved conversion rates to finance their
imports.

However, many entrepreneurs still kept their dollars, for fear
they would not get the same value whenever they needed dollars
again, he said.

"Many people still do not know that they are guaranteed not to
lose money if they sell dollars through the swap and forward
facility," he said.

Tunky said most exporters in the country consisted of small
and medium entrepreneurs.

Yesterday's discussion was held by Kadin during its two-day
national working meeting which started Wednesday. (das)