Weaken Rupiah, Bauxite Association Calls Export Permits Needed

JAKARTA - Daily Executive (Plh) Chairman of the Association of Indonesian Iron Workers (APB3I) Ronald Sulistyanto opened his voice regarding the impact of weakening the rupiah exchange rate on mining commodities, especially bauxite.

Ronald said, the weakening of the rupiah also affected the production cost component because it has a US dollar base.

"Because there is an opportunity in a situation like this, of course exports will be the mainstay. If exports can be done, of course we can get foreign exchange," he said in the Mining Zone quoted on Tuesday, July 2.

In addition to receiving state foreign exchange, he said, bauxite entrepreneurs can also reposition things that are sharpened to circumvent the law's order, namely downstream bauxite.

Ronald said that downstreaming of bauxite does take time and with the strengthening of the dollar, the recount of the smelter development will change greatly because it uses a dollar base.

"In the past, it was only 4-5 percent of the dollar loan, now the basic is only 5.25. Plus the bank profit margin is 3 percent, so 8 percent is very high. Especially with the new policy in the US, it will bring about the unhealthy result. Moreover, the return of capital or the BEP will be longer," explained Ronald.

Thus, Ronald said, investors would then question the decision to invest in Indonesia again.

According to him, in conditions like this, the association suggested an effort to obtain a bauxite export permit so that it could obtain foreign exchange and save bauxite entrepreneurs.

Moreover, he said, currently the nvestor is still going back and forth to invest.

"Yesterday, with no strengthening of the dollar alone, it was back and forth, especially with the strengthening of the dollar, the weakening of the rupiah was even more difficult for him to decide to invest in Indonesia," concluded Ronald.