Hippindo Reveals The Impact Of The BI Reference Interest Rate Increase On The Retail Industry

Retail industry (Photo: dock. Unsplash)

JAKARTA - Chairman of the Indonesian Shopping Center Retailers and Tenants Association (Hippindo), Budihardjo Iduansjah, opened his voice regarding the impact of the increase in Bank Indonesia's benchmark interest rate by 25 basis points to 6.25 percent in the domestic retail industry.

Budi said, the impact of the increase in interest rates was actually greater when compared to the weakening of the rupiah which had occurred some time ago.

If interest rates increase, he said, it could have an impact on the increase in bank interest, which then has an impact on the increase in loan interest rates.

"There will be additional costs from downstream to upstream. Factories, bank interest loans are increasing, retail is also borrowing to pay rent and so on to increase," he told the media when met at the Ministry of Industry Building, Thursday, May 2.

According to Budi, this increase in interest rates must be balanced with increased sales traffic by retail. If sales traffic increases, it will not have an impact on the Cost of Production (HPP) because it can still be absorbed from mixed margins.

Budi said that the increase in interest rates also had a positive impact, including the middle class who had savings deposits that would have'more' money that could be used for shopping.

In addition, with the weakening of the rupiah, many foreign tourists will make tourist visits and spend their money in Indonesia. Thus, spending traffic increases and the amount of money circulating in Indonesia will increase.

"Calculate, instead of going to Vietnam, it's better to go to Indonesia because the price is cheap and the dollar is strong, yes. It's just a matter of how the government policies maximize the good. There are a lot of tourists, money traffic is circulating a lot," continued Budi.

Regarding Hippindo's steps to overcome the impact of the increase in interest rates, Budi admitted that his party was efficient by encouraging unnecessary costs, including looking for new, easier suppliers.

When asked about the opportunity to lay off employees, Budi admitted that layoffs were the last option that Hippindo considered.

"(PHK) is usually the last choice because in retail, the human resources are special, meaning trained. Serving. The last layoff was because it was difficult to find people," concluded Budi.