Rupiah's fall will not help exports: Tunky

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)