President Joko “Jokowi” 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 Friday (27/07).
Repatriated earnings could help Southeast Asia’s largest economy refill its declining foreign exchange reserves, which the central bank has been using to keep the rupiah from falling too sharply amid a heavy selloff in emerging market currencies.
The president on Thursday met with executives from about 40 exporters, including Budi Hartono, the owner of cigarette maker Djarum, chief executive of Indofood Sukses Makmur Anthony Salim and chairman of GarudaFood Group Sudhamek Agung, for two and a half hours to make his case.
“We hope they keep their export earnings in Indonesia. If they have to use it to buy raw materials and imports, the FX could be used … but we hope the rest can be kept in Indonesia and be converted to rupiah,” Finance Minister Sri Mulyani Indrawati said.
BI in 2012 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. However, some still prefer to keep their earnings abroad.
Indrawati said BI and the government will continue to maintain close communication with the business community, while monitoring whether they need to issue new policies on the matter. She did not elaborate.
BI governor Perry Warjiyo has repeatedly said he has no plans to implement tougher rules for export earnings.
Between February to June, forex reserves had declined $12.2 billion or about 9 percent, according to Bank Indonesia (BI) data, yet the rupiah is still down more than 6 percent in 2018. The currency was trading near its weakest level in nearly three years on Friday, at 14,460 a dollar.
The central bank said that the end-June reserves level of $119.8 billion was equal to 7.2 months of imports, higher than the international adequacy standard of 3 months of imports.