Bumi Coal Mines in Indonesia - Photo by Bumi Resources

JAKARTA (TheInsiderStories) PT Bumi Resources Tbk (IDX: BUMI), one of Indonesia’s largest coal producer & exporter planned to convert most of its foreign exchange (forex) revenues to Rupiah, said the company on Monday (08/10). Today, the local currency lowered to 15,220 per US dollar, this is the new record low for the rupiah this year which continues to weaken.

This stepped followed another coal miner PT Adaro Energy Tbk (IDX: ADRO) planned to convert as much as US$1.7 billion export funds to Rupiah to help strengthen the country’s currency

Saptari Hoedaja, President Director & CEO BUMI said in a written statement, “BUMI fully supports the pressing national priority of protecting the Rupiah and the nation.”

He stated, this year BUMI expects to earn revenue exceeding of US$5 billion and almost 80 percent of its revenue from export and domestic market obligation (DMO) is converted to Rupiah. The rest is for capital expenditure and other purposes.

Hoedaja added, the company confirms that it is also on track in fulfilling its DMO obligation of 25 percent.

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 last week.

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.

Email: linda.silaen@theinsiderstories.com