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