Steel industry confident export governance will strengthen the exchange rate

Fluctuations in the exchange rate significantly affect the production costs of the steel industry, so government steps to regulate export flows could help maintain stability in the rupiah.

Bekasi — national steel industry players believe that government policies on export governance can help strengthen the rupiah amid the dynamics of global challenges.

Hernowo, Commercial Director, Business Development and Portfolio at PT Krakatau Steel (Persero) Tbk, in Bekasi, West Java, on Friday, said exchange-rate fluctuations are one of the challenges for the national steel industry because a portion of raw materials must still be imported.

He added that currency movements significantly influence production costs, and thus government measures to regulate export flows could help maintain stability of the national currency.

“The government seems to want to help players like us who frequently transact with foreign parties by regulating to ensure that when we export, the incoming foreign exchange is well managed; hopefully this can strengthen the rupiah again,” he said.

Meanwhile, Stephanus Koeswandi, Vice President Operations at PT Tata Metal Lestari, assessed that current exchange rate conditions are still quite challenging for business due to global uncertainties.

“Exchange rate is indeed quite challenging because this is a global issue that creates an uncertain business environment,” Stephanus said.

Nevertheless, he stressed that the company would continue to follow government guidance by prioritising domestic market needs while increasing exports to strengthen national foreign exchange reserves.

“But of course we are in line with the President’s instructions: first ensure domestic needs are met, then increase exports so that we can bring dollars back to Indonesia and thus bolster the foreign exchange reserves,” he said.

President Prabowo Subianto, in a plenary session of the Indonesian House of Representatives at the Nusantara Building, MPR/DPR/DPD complex in Jakarta, on Wednesday 20 May, announced that the government is issuing a Government Regulation (PP) on the Governance of Export of Natural Resource Commodity (SDA).

In the latest PP, Prabowo said one of the provisions designates state-owned enterprises as sole exporters for commodities including palm oil, coal, and ferro alloys.

The state-owned enterprise in question is PT Danantara Sumberdaya Indonesia.