Working capital needed

Working capital needed

Optimism has been expressed by the government, specifically by
the Ministry of Industry and Trade, that this year's export
target of US$43 billion can be reached given the growth rate of
Indonesian exports is still the highest in the East Asian region.

Such optimism is supported by the fact that the depreciation
of the rupiah against the U.S. dollar this year has already
reached 130 percent, which makes this country's exports more
competitive in the world market.

However, is it really possible to boost our exports? Several
leading Indonesian products have indeed become more competitive
due to the depreciation. Foreign buyers have already begun
closing more contracts with our exporters. In a meeting with Bank
Indonesia officials in Solo early this week, exporters reported
that the amount of export orders was growing.

One small textile manufacturer who last year was almost forced
to go out of business reported that he now had enough export
contracts to cover the first quarter of the coming year. A
growing number of export orders has also been received by other
leading industries, such as processed timber, agricultural
products and certain manufactured goods.

However, this growing demand for export goods also brings its
own problems. It means that exporters need working capital and
this is where the problem begins. For exporters, particularly
small-scale businesses, it is not easy to obtain working capital
needed to meet the growing number of orders. Though the money may
be available, banks are slapping high interest rates (of up to 30
percent) on working capital loans.

For this reason it would help if the optimism expressed by
officials at the Ministry of Industry and Trade could be combined
with efforts to find a solution to the problems which exporters
are facing, such as the high cost of working capital.

We naturally hope that the depreciation of the rupiah against
the dollar can benefit by boosting our exports. This is why the
present shortage of working capital needs to be remedied.

-- Bisnis Indonesia, Jakarta