JAKARTA • 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 yesterday.
Repatriated earnings could help South-east 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 sell-off in emerging market currencies.
The President on Thursday 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 21/2 hours to make his case, according to several media reports.
"We hope 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," Finance Minister Sri Mulyani Indrawati told a press briefing.
Bank Indonesia (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.
Most exporters have complied with those rules and 90 per cent 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 per cent to 25 per cent is converted to rupiah, he added.
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.
Mr Adityaswara said there is no plan to change the current rules.
Between February and last month, foreign exchange reserves had declined US$12.2 billion (S$16.6 billion) or about 9 per cent, according to BI data, yet the rupiah is down more than 6 per cent this year. The currency was trading near its weakest level in nearly three years yesterday, at 14,460 rupiah a US dollar.
The central bank said that the end-June reserves level of US$119.8 billion was equal to 7.2 months of imports, higher than the international adequacy standard of three months of imports.