Rupiah Weakness Opens Opportunities to Boost Local Product Consumption

The weakening of the rupiah exchange rate against the US dollar is seen as a momentum to increase the consumption of local products amidst the rising prices of imported goods in the domestic market. Economic observer and lecturer at the Faculty of Economics and Business, University of Indonesia (FEB UI), Dr. Toto Pranoto S.E., M.M, said the rupiah’s depreciation makes imported products more expensive, thus opening greater opportunities for domestic products to compete. “With the rupiah’s depreciation, the price of imported goods becomes expensive, so the potential for domestic products to show their strength is increasingly open,” Toto Pranoto said when contacted by ANTARA in Jakarta on Wednesday. Toto assessed that a more consistent implementation of the Domestic Component Level (TKDN) regulation could be an important instrument to strengthen the position of local products in the domestic market. However, he cautioned that there are still a number of challenges that need to be addressed so that domestic industries can optimally utilise this momentum. “The main challenge is certainly related to how local industries can be protected from smuggled imported goods, which have been very rampant lately,” he said. In addition, Toto highlighted the dependence of a number of business actors, especially micro, small, and medium enterprises (MSMEs), on imported raw materials. He added that the government needs to tighten supervision at import entry points to prevent smuggling practices while ensuring the implementation of TKDN runs effectively. On the other hand, local producers also need to improve production efficiency, strengthen access to raw material supplies, and build a strong brand image to increase the competitiveness of domestic products. “Strong company branding can be a determining factor for their competitiveness going forward,” said Toto.