Rupiah's Strengthening Threatens National Furniture Industry

JAKARTA, KOMPAS.com - The rupiah’s strengthening may threaten domestic furniture and handicraft industries, the Indonesian Furniture and Handicraft Producers Association (ASMINDO) warned, calling on the central bank to intervene in the money market.

"The rupiah’s strengthening from Rp10,000 to Rp8,600 per dollar has caused difficulties to furniture and handicraft exporters," ASMINDO Chief Ambar Tjahyono said here on Thursday.

The appreciation made Indonesian furniture and handicraft goods lose ground in the global market to similar products from rival countries and led to a glut of Chinese products to the domestic market, he said. To make profit, he stated domestic producers must raise their prices but this would cause international buyers to switch to other suppliers that offered lower prices.

He further expressed regret over the higher lending rate which currently reached more than 13 percent while interest on time deposits only stood at an average of 7 percent. "If this continues to happen only banks can do business," he said.

He said if the rupiah continued to strengthen to a level of Rp8,000 a dollar not only furniture and handicraft industries but also other industries relying on exports would collapse.

In addition, the rupiah’s strengthening would also threaten the target of furniture and handicraft exports which has been set at US$3 billion for 2011, he said. Ideally, the rupiah should trade at Rp9,500 a dollar in the money market, he said.