Thai exporters cautious over Indonesia
Thai exporters cautious over Indonesia
BANGKOK (Reuters): Escalating problems in Indonesia, a major
importer of Thai rice and sugar, has unnerved Thai exporters,
industry sources said yesterday.
Indonesia has so far delayed a relatively small shipment of
rice and committed to sugar purchases. But Thai exporters said
they are increasingly worried about Indonesia's political and
economic prospects and the direction of the volatile rupiah
currency.
If Jakarta failed to form a currency board to peg the rupiah
to a major currency as planned, the Indonesian unit could drop
further and affect that nation's ability to import, they said.
The currency has lost up to 76 percent of its value against
the U.S. dollar since last July, the start of the region's
financial crisis.
If it introduces a currency board, Indonesia might run into
trouble with the International Monetary Fund (IMF), which has
asked Jakarta not to implement the system. The IMF has suggested
it might halt the flow of cash agreed under a $43 billion aid
package the fund helped arrange, a move likely to drive the
currency well below 10,000 to the dollar.
"So far, (Indonesia) has committed well to its sugar
contracts. There have been no defaults or cancellations. But we
just wonder what would happen if the rupiah continued its
downward trend," said one sugar trader.
Traders said the market was confused by the news that
Indonesia was unlikely to import more sugar from Thailand.
"We heard a report that they are not going to import more.
That is a bit unclear and worrying," said another trader from a
major European trading house.
"Do they mean they are not going to buy more than what they
had made contracts, or they are not going to take any more
deliveries other than what has been executed?" he said.
Trade sources believed Indonesia has bought around 700,000
tonnes of white sugar from Thailand for this year although a
large part of the contracts had yet to be executed.
Thailand delivered about 117,250 tons of white and refined
sugar to Indonesia in January. Similar quantities were expected
to be shipped in February and March.
Thai rice traders also complained that recent problems with
Indonesia's letters of credit has cut the volume of rice traded
between the two countries.
Indonesia recently delayed taking delivery of shipments of
around 100,000 tons of rice because of problems with letters of
credit following the country's temporary freeze on foreign debt
repayments.
"Indonesia is a big buyer and I hate to say that the situation
made us more cautious," said an executive at one major rice
trading firm.
"However, I hope the situation will not be too bad as
procuring rice to meet local demand should be on the top of the
country's priority list," he said.
Industry sources had earlier forecast that Indonesia could
import up to 800,000 tons of Thai rice this year.