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.