Jokowi to exporters: Bring earnings home

• Indonesian President Joko Widodo has pleaded with exporters to bring home earnings they currently keep offshore to help manage the rupiah from falling further, the country’s finance minister said on 27 Jul.
• Repatriated earnings could help Indonesia refill its declining foreign exchange reserves, which the central bank has been using to keep the rupiah from falling too sharply amid a heavy sell-off in emerging market currencies. The central bank said that the end-Jun 18 reserves level of USD119.8bn was equal to 7.2 months of imports, higher than the international adequacy standard of 3 months of imports. Between Feb 18 and Jun 18, foreign exchange reserved had declined USD12.2bn or around 9%.
• The President on 27 Jul met executives from about 40 exporters, including Mr Budi Hartono, the owner of cigarette maker Djarum; Mr Anthony Salim, chief executive of Indofood Sukses Makmur; and Mr Sudhamek Agung, chairman of GarudaFood Group, for 2.5 hours to make his case. Finance Minister Sri Mulyani Indrawati said the meeting was held to gather input from the businessmen on managing the prolonged global uncertainty. The government also asked how to channel export revenue to Indonesia. She said that the Indonesian government hoped they keep their export earnings in Indonesia.
• “If they have to use it to buy raw materials and imports, the FX (foreign exchange) could be used… but we hope the rest can be kept in Indonesia and be converted to rupiah,” Sri Mulyani added.
• In 2012, Bank Indonesia (BI) ordered exporters to receive their payments through local banks, in the hope that some of the money would stay in the country and be converted into rupiah. Most exporters have complied with those rules and 90% of export earnings have been recorded at domestic banks, BI’s senior deputy governor, Mr Mirza Adityaswara, said. But out of the total that stays in local banks, only 15% to 25% is converted to rupiah, he added. There are no plans to change the current rules.
• Many domestic banks usually put exporters’ dollar savings in their Nostro accounts, which means the money goes out of the country again, said Coordinating Minister of Economics Darmin Nasution. A Nostro account is one held by a bank with a bank in another country, and in the currency of that country.
• Indonesia Chamber of Commerce and Industry (Kadin) chairman Rosan Perkasa said that some revenue is parked abroad in order to pay foreign debts. In addition, some foreign banks required companies to deposit money in their branches abroad in order to obtain loans. Rosan said that some businesspeople have offered solutions such as using loans from foreign banks that have Indonesian branches but stressed that nothing is final, with more intensive talks with the Finance Ministry and the Investment Coordinating Board planned soon.

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External Link: http://www.thejakartapost.com/news/2018/07/27/government-calls-on-export-heavyweights-to-help-bolster-rupiah.html