Rupiah's fall will not help exports: Tunky

JAKARTA (JP): The rupiah's depreciation against the U.S. dollar will not necessarily improve the competitive edge of Indonesian exports, a minister said yesterday.

Minister of Industry and Trade Tunky Ariwibowo acknowledged that the rupiah's fall had made Indonesian products cheaper overseas but he said the depreciation would not really help boost exports because the currencies of Indonesia's main competitors had also significantly dropped against the greenback.

Exports from Malaysia, Thailand and the Philippines, which have also been hit by the currency turmoil, have also become more competitive, he said.

"Exports from these countries have become more competitive as their currencies have weakened as well," the minister added.

The currency crisis, triggered by the de facto devaluation of the Thai baht on July 2, has significantly cut the value of most Southeast Asian currencies.

The rupiah, the Malaysian ringgit, the Philippine peso and the Thai baht have declined by between 20 percent to 25 percent against the American dollar since massive speculative attacks on the region's currencies. Singapore's dollar has also come under attack.

Indonesian economists said in theory the fall in the rupiah's value would improve the competitive edge of the country's exports.

"But in Indonesia's case, the currency depreciation would have no positive impact as exporters have to pay higher costs resulting from the increase in interest rates," one analyst said.

Bank Indonesia raised the key interest rates of its short-term SBI papers to as high as 30 percent early last month to prop up the rupiah. The central bank has gradually lowered the rates since then but the rates, according to analysts, are still too high.

According to the Money Market Information Center, the average deposit rate is still high at 20.59 percent. Certain banks still offer as high as 31 percent. The average lending rate stands at 24.9 percent but some still charge their borrowers 48 percent per annum.

Tunky said the government would seek more rational ways to improve the country's non-oil exports such as improving the country's international networking by benefiting modern information technology.

"Japan has a very efficient network worldwide to absorb information from the international market. This is what unites the trade sector and helps it gain strength in the world market," he said.

Unlike Japan, most Indonesian businesspeople are not yet familiar with modern information technology, Tunky said.

Tunky said the country would also focus on increasing interregional trade. (das)