RI favors undervalued rupiah

RI favors undervalued rupiah

WASHINGTON (Reuter): Indonesia's Finance Minister Mar'ie Muhammad said that his country would rather have its rupiah be undervalued than overvalued.

The minister, speaking to a conference sponsored by the Institute of International Finance, said Sunday that the country intended to depreciate the currency by five percent per year against the U.S. dollar.

"We are in favor of having a rupiah slightly undervalued rather than overvalued," Mar'ie. "Our intention is to have five percent depreciation."

To continue its recent levels of strong growth, Indonesia would need massive investment, most of which would need to come from private sector. "The private sector must be the engine of growth in the next century," Mar'ie said.

Asked about allegations of labor abuses in Indonesia, the minister said his government was concerned about the level of salaries and working conditions in the country's factories.

"We are of course highly concerned and committed to improve their working conditions," Mar'ie said. "We are concerned about labor conditions, but we cannot compare conditions to those in developed countries."

In June, a U.S. lobbying group that monitors manufacturing practices said that U.S. sporting company Nike Inc used sweatshops in Indonesia to make its popular Air Jordan basketball sneaker and other products.

Human rights and labor advocates staged protests in Washington in July demanding that Nike improve pay and conditions for its contract workers in Indonesia. They accused the company of dismissing workers unfairly, paying below the minimum wage and forcing employees to work overtime.

Nike has said the protesters were citing situations dating back to 1992 that have been corrected.