Indonesian firms, workers hit by rising costs
By Zakir Hussain, The Straits Times/Asia News NetworkJAKARTA -- With the rupiah sinking, George Lee, 59, a Singaporean chef working in Jakarta, feels lucky to be paid in Singapore dollars.
September 9, 2013, 4:08 pm TWN
Two years ago, he would get 7,000 rupiah for every Singapore dollar. Now, he gets over 9,000 rupiah.
But expatriates like him, who are paid in foreign currencies, now have a different sort of worry. “I'm concerned that maybe I'm getting too expensive for the company,” Lee, who has been here for four years, told The Sunday Times.
Four weeks after the rupiah began a steep decline against the U.S. dollar, workers and businesses said they are struggling to cope as costs have also gone up by as much as 20 percent.
Inflation was 8.79 percent year on year in August, and some project it could approach 10 percent by year-end.
Many fear the currency will stay weak for some time yet.
On Friday, banks and money changers were seeking 12,000 rupiah for every U.S. dollar, compared to 10,000 rupiah barely a month ago.
Even middle class workers like Lee, once confident of tiding over rough times, worry that a sharp drop in consumer spending could soon be on the horizon.
Electronic goods dealers have been among the first to feel the pinch, with shops in Glodok reporting a sharp drop in sales of cameras, computers and other devices.
Airlines are mulling over raising fares as fuel costs rise, but are worried this will hurt demand.
Meanwhile, industries heavily reliant on imported food have been hard-hit.
Prices of soy beans, an essential ingredient in tempe and tofu that remain the main source of protein for most Indonesians, have shot up from under 8,000 rupiah a kg to beyond 10,000 rupiah a kg.
The association of tempe- and tofu-producing cooperatives, Gakoptindo, said its members across the country will stop work for three days from tomorrow to Wednesday to try to force the government to step in and stabilize runaway prices.
Said its general secretary Suyanto: “If the strike doesn't work, all tempe and tofu producers will take to the streets.”
Other workers also plan to continue taking to the streets in the coming weeks to demand wage hikes, citing rising inflation.
Economist Raden Pardede said the rupiah will remain unstable for some time yet, “but we will only see the impact of this fully at the end of the year.”