JAKARTA, RAKYAT NEWS – Trade Minister Budi Santoso has confirmed that the government’s new Devisa Hasil Ekspor (DHE) policy, which requires exporters to deposit 100% of their foreign exchange earnings in Indonesia for one year, will not negatively affect the nation’s export performance this year.

The policy, which extends from the previous rule mandating a minimum 30% deposit for three months, aims to stabilize the value of the Indonesian rupiah.

Minister Budi emphasized that the extension of the DHE policy is in the interest of the nation, and he believes it will not hinder export targets.

“I think the extension of the DHE will not interfere with this year’s export targets because this is a government policy,” he said in Jakarta on January 22, 2025.

One of the primary reasons behind the DHE extension is to stabilize the exchange rate. As of January 21, 2025, the rupiah had weakened to IDR 16,331 per US dollar, a 4.5% decline from IDR 15,627 per dollar a year earlier. This depreciation is a concern for the government, prompting the need for measures like the DHE policy to manage the currency’s value.

Despite the government’s assurances, the policy has raised concerns among industries, particularly the processed food sector, which includes products like coffee, cocoa, and palm oil.

Adhi S. Lukman, Chairman of the Indonesian Food and Beverage Producers Association (GAPMMI), has suggested that adjustments be made for specific industries affected by the DHE policy.

Adhi explained that while the policy is appropriate for raw commodity exports, its application to processed food manufacturers could lead to increased production costs and reduced competitiveness in export markets.

He pointed out that the DHE policy could tie up a company’s cash flow for a year, forcing manufacturers to increase their working capital credit lines from banks.

As a result of the extended cash flow period, production costs may rise, ultimately leading to higher product prices. This, according to Adhi, could make Indonesian food and beverage products less competitive in international markets.

Eddy Martono, Chairman of the Indonesian Palm Oil Producers Association (GAPKI), also expressed concerns over the potential impact of the DHE policy on palm oil production. Eddy plans to discuss the policy with the Coordinating Ministry for Economic Affairs to clarify whether the DHE funds must remain frozen for a full year or if they can be accessed earlier.

Eddy warned that if the funds must remain locked for a full year, it could further pressure palm oil prices. Currently, the price of Fresh Fruit Bunches (FFB) has already fallen by IDR 150 to IDR 200 per kilogram due to export levies, domestic market obligations, and export taxes. The DHE policy could exacerbate this issue.

Eddy predicted that the policy could lead to higher production costs for domestic crude palm oil (CPO) manufacturers. He projected that the cost of CPO could rise in international markets, possibly by as much as 10%. This increase could create a mismatch, with domestic CPO prices falling while international prices rise, or both prices could increase, with domestic prices rising by 3.5% and international prices climbing by up to 10%.

The government continues to review the policy’s impact, but industry leaders remain concerned about its long-term effects on Indonesia’s export competitiveness. (Uki Ruknuddin)