Adaro Energy Converts Dollar to Rupiah US$1.7 Billion in This Year - Photo by the Ministry of Finance

JAKARTA (TheInsiderStories) – PT Adaro Energy Tbk (IDX: ADRO) has planned to convert as much as US$1.7 billion export funds to Rupiah to help strengthen the country’s currency, said the president director. For that, the company will conduct its business transactions using rupiah with several of its partners.

Garibaldi Tohir said, this step was one of the support of entrepreneurs to the country to be able to stabilize the position of the rupiah against the dollar. Today, Rupiah has hit the lowest level since 1998 at Rp15,098 against US dollar according to Bank Indonesia data.

“Hopefully the impact can give something positive for the country,” he said after the signing of an agreement between Adaro and its partners to increase transactions using the rupiah at the Ministry of Finance today (03/10).

Thohir explained that in one year, Adaro usually makes a nearly $2 billion dollar transaction. In detailed, royalty payments around$700 million dollars per year.

While the transaction to state-owned energy producer PT Pertamina to pay for fuel is around $500 million dollars per year. And, transactions with coal extraction contractors around $700 dollars per year.

“Some have already paid using the rupiah. Indeed, some of us have to deal with the old contract using dollars. But from now on we commit,” said Boy, his nickname.

He did not deny that by making transactions to the rupiah, there will be losses in transactions but did not significantly affect the financial condition of the company.

Meanwhile, Minister of Finance Sri Mulyani Indrawati asked all Indonesian companies to conduct business transactions using rupiah. This step, she said, was very helpful for the country to be able to stabilize the position of the Rupiah against the dollar.

“By converting, it is expected that there will be a balance between dollar supply and dollar demand. If there is a transaction that does not need dollars, then use rupiah only. But if you need a dollar to import capital, it is acceptable,” said the minister.

Indrawati explained that in the current global economic conditions, the strengthening that can be done by the state is to maintain the stability of investment and also encourage economic players to use the rupiah more. This can then reduce the demand for the US dollar so that the condition of the rupiah does not get worse.

“Flexibility is at the core of how we manage an improved economy. Oil prices and money policies are carried out by America both monoter, fiscal trade,” added by her.

The minister said the government also safeguards the economy by keeping economic momentum growth above 5 percent. Then, she said, inflation was also maintained so as not to exceed 3 percent.

“We must take care of this, the impact of this dynamic on the domestic economy. Changes that occur quickly, do not panic, but make adjustments that are flexible,” she urged.

Furthermore, Indrawati stated to be able to attract entrepreneurs to make transactions into the rupiah and bring their export results into the country there would be some incentives that the government would pour out to entrepreneurs.

“We are finalizing, and we will announce,” she added.

The former World Bank director hopes that with this incentive the entrepreneurs will be able to convert their dollar transactions to rupiah.