[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 on Friday.
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, 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 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.
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, senior deputy governor of BI Mirza Adityaswara told reporters in a separate briefing.
But out of the total that stays in local banks, only 15-25 per cent are converted to rupiah, Mr Adityaswara 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.
Ms 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.
Mr Adityaswara said there is no plans to change the current rules.
Between February to June, foreign exchange reserves had declined US$12.2 billion or about 9 per cent, according to Bank Indonesia (BI) data, yet the rupiah is still down , more than 6 per cent 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 US$119.8 billion was equal to 7.2 months of imports, higher than the international adequacy standard of 3 months of imports.