Merdeka.com – The Indonesian Employers’ Association (Apindo) said it was worried about the weakening of the exchange rate Rupiah against the United States dollar (USD) will raise production costs. Given, some of the raw materials are still imported from abroad.
“Entrepreneurs have concerns that if the weakening (Rupiah) continues, it will certainly have an impact. Especially for manufactures or production that have a dependence on imported raw materials for their production, it will certainly have an effect,” said Apindo Tax Committee Chairman Siddhi Widyaprathama at the Merdeka Barat Forum 9 (FMB9) in JakartaMonday (25/7).
To protect business continuity, Apindo urges the government and Bank Indonesia to continue to expand the use of local currency or local currency settlement (LCS) in trade and investment transactions in order to reduce dependence on USD. Indonesia itself has agreed on the SCS framework with four countries, namely China, Japan, Malaysia, and Thailand.
“We hope that in the future it can continue to grow to increase the number of participations. In particular, Indonesia must take advantage of the momentum as the G20 Presidency by encouraging further promotion of the LCS to reduce dependence,” he explained.
In addition, Apindo also urges business actors who are dependent on imported raw materials to look for alternative domestically produced goods. This is aimed at the company’s financial efficiency amid the weakening of the Rupiah exchange rate.
“On the other hand, the weakening of the Rupiah exchange rate is an opportunity for the business world to look for alternative components that can be produced domestically to reduce dependence on imports,” he concluded.
Previously, Bank Indonesia (BI) recorded that until July 20, 2022 the exchange rate rupiah depreciated or weakened 4.9 percent compared to the position at the end of 2021. However, the Group Head of the Department of Economics and Monetary Policy of Bank Indonesia Wira Kusuma said the depreciation of the rupiah was relatively lower than the currencies of other developing countries.
“But if we compare the depreciation rate of neighboring countries, we are relatively better than other countries. For example, until July 20 point to point we depreciated 4.9 percent, but countries like Malaysia 6.42 percent, India 7.05 percent , Thailand is 8.93 percent, so we are relatively better than that,” said Wira at the Merdeka Barat 9 Forum (FMB9), Monday (25/7).
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