Yen rise drives attention away from Japanese products

Yen rise drives attention away from Japanese products

By Andreas Harsono

JAKARTA (JP): The sharp appreciation of the Japanese yen
against major currencies and the rupiah has made a number of
economists and businessmen turn their attention to non-Japanese
products.

Economists Pande Radja Silalahi and Hadi Soesastro of the
Centre for Strategic and International Studies (CSIS) said
recently that it is high time for Indonesia to look for other
choices and to diversify its import sources.

"The wisdom of this experience is that we must diminish our
dependency on developed countries, particularly Japan," Silalahi
said.

According to government officials, the total foreign debt of
the Indonesian government and private sectors has reached almost
$90 billion, of which more than 40 percent is in the Japanese
currency, which appreciated by 14 percent against the U.S. dollar
from 111.6 yen to the greenback in early January to 98.96 on
Friday and by some 17 percent against the rupiah from Rp 19.2 to
Rp 22.2.

Palgunadi T. Setyawan, an executive of PT Astra International,
said that the extra burden of this yen surge has to be carried on
the shoulders of Indonesia's fatigued laborers. He seemed intent
on trying to remind his Japanese colleagues about how rapidly the
situation of workers could worsen.

PT Astra International is an affiliate of the Japanese giant
automobile industry, the Toyota Motor Corporation.

A higher capital investment in Indonesia, which unnecessarily
brings more procurement of Japanese products, has traditionally
resulted in the reduction of wages.

Economists said the reason behind Indonesia's notorious high
cost economy is that business people must spare a significant
percentage of their total production costs for bribing government
officials to overcome red tape.

Meanwhile, Indonesian workers have been intensifying their
struggle to demand that the government, as well as their
employers, respect labor rights.

While having his lunch in a five-star hotel, Palgunadi said
that the yen's surge will not hinder the Indonesian middle and
upper classes from continuing to enjoy their comfortable life
styles.

"It is the laborers who will suffer at the first hand," he
said.

Products

Daniel Budi Setiawan, the president of PT Siba Surya trucking
company in Semarang, Central Java, however, told The Jakarta Post
in recent telephone interviews that the only way to survive the
constraints is to lessen the buying of Japanese products due to
their declining competitiveness.

Citing an example, Daniel argued that in 1978 the price of a
made-in-Germany truck equaled that of two Japanese trucks.
Today's comparison is one on one.

He said the reason behind the price hike was not necessarily
the technological betterment of Japanese trucks nor the rupiah
devaluation but more because of the yen appreciation and
Indonesia's dependence on Japanese products.

Daniel, who recently bought 120 Mercedes-Benz trucks, said
that the price of Japanese trucks had increased fifteen fold from
Rp 4.9 million in 1978 to Rp 75 million in 1994.

"Why should we then continue to buy Japanese trucks?" he said.

Daniel is trying to buy cheaper East European trucks and is
seeking the support of the government.

Silalahi applauded the decision of an individual businessman
like Daniel, saying that Indonesia should diversify its import
sources to support the proposal of its entrepreneurs.

Data at the Central Bureau of Statistics indicate that
Indonesia's imports from Japan last year reached $6.2 billion,
some 22 percent of its total imports of $28.3 billion.

Tying clauses

Corporate lawyer Todung Mulya Lubis, said that it is not easy
to cut down Indonesia's dependence on Japanese products because
the Japanese manufacturers have established the infrastructure
for their businesses in Indonesia since the 1960s.

Herman Zaini Latif, the chairman of the Indonesian Automotive
Industry Association, responded that it is naive to say that the
Japanese industries are not competitive any longer.

Herman, also the vice president of PT Krama Yudha Tiga Berlian
Motors, an affiliate of the Japanese Mitsubishi Motors
Corporation, bluntly rejected the proposal to launch a campaign
against Japanese products, saying that it is impossible to fight
against the market mechanism.

He said Daniel cannot make a valid comparison between German
and Japanese trucks just on the grounds of the rupiah
devaluation, saying that the varied specifications of the trucks
had created a totally different situation.

Lubis, human rights activist-turn-lawyer, added that "tying
clauses" in every business deal have made it impossible for
Indonesia to stop the procurement of Japanese products.

Although Lubis, as well as the two economists, agreed that
proposals like Daniel's need to be tried, they said much work
must be done to make it effective.

"It is easier said than done," Lubis added, as if trying to
point out that developing countries cannot avoid accepting the
burden of unfair relations between the rich and the poor.