Rupiah's sharp rise may hurt RI's exports

Rupiah's sharp rise may hurt RI's exports

Adianto P. Simamora, The Jakarta Post, Jakarta

Indonesian exporters fear that the sharp appreciation of the
rupiah against the U.S. dollar will make their products more
expensive in the export market compared to products from
competitor countries whose currencies have not appreciated as
fast as the rupiah.

"If the rupiah strengthens to beyond Rp 9,000, we'll be in
difficulties," Anton J. Supit, head of the Indonesian Footwear
Association (Aprisindo), said on Monday.

An overappreciation of the rupiah would make the dollar price
of Indonesian products more expensive overseas, thus
theoretically making them less competitive compared to the
products from other countries.

Anton cautioned that if the rupiah strengthened too fast, the
shoe export target of around US$1.5 billion this year would be
difficult to achieve.

Previously, an executive with a local electronics maker warned
that if the rupiah strengthened to beyond Rp 8,500, the country's
electronics exports would be badly hit.

The rupiah has been on the rise since the beginning of this
year. The local unit breached the psychologically important level
of Rp 9,000 Monday, a level not seen since September 2001, before
closing at Rp 9,050.

Analysts said that the rupiah could still get stronger amid
hopes of more dollars entering the local market with the upcoming
sale of state assets.

Anton said that to help the country's already sluggish export
performance amid the global economic slowdown and to offset the
negative impact of the rupiah's sharp appreciation, the
government must take action to curb the high cost of doing
business at home, and avoid a further rise in energy costs.

The main competitors for Indonesia's shoe products are China
and Vietnam.

Meanwhile, executive director of the Indonesian Textile
Association (API) Indra Ibrahim also warned that the rapid
appreciation of the rupiah would hurt textile exports.

But he declined to say the ideal level of the exchange rate,
saying that the association had yet to make the calculation.

He said, however, that if the rupiah continued to strengthen
from the current level, the textile export target of $7.8 billion
could not be achieved.

"I was previously very confident that the textile exports
would increase this year to $8 billion but...if the rupiah
continues to strengthen, it may be lower than $7.6 billion,"
Indra said.

Last year, the country's textile exports totaled $7.6 billion.