Indonesia's Currency Tumble Is a Bargain-Hunter's Boon
By Keith B. Richburg
Indonesia's currency, the rupiah, has lost three-quarters of its value since last fall. Companies are technically bankrupt. Layoffs loom, and the country is battling an economic and political crisis. What does it all mean?
Cheap shopping, at least for the large foreign community, and for business travelers, tourists and journalists. The correspondents, photographers and television crews descended on Jakarta in the last few weeks to chronicle Indonesia's new Year Of Living Dangerously. What they found instead with the bargain-basement prices was something closer to the Month Of Living Comfortably.
Comfortably, as in a full-course Japanese meal, including sushi and sake, for about 60,000 rupiah -- $6, when the rupiah was hovering at 10,000 to the dollar. Or a half-day taxicab hire around the sprawling capital, for a total of just 50,000 rupiah, or $5. Shorter rides go for just change -- literally. The shortest taxi ride is usually just 1,500 rupiah, or 15 cents.
Foreign business travelers find Jakarta a joy for shopping. "At these prices, why not?" said an Australian businessman, stocking up on white Savile Row dress shirts at the Sarinah department store. "Try to get an English shirt in Australia for $9!"
The bargain shopping may not last long. Over the last week, the rupiah managed to strengthen, from 10,000 to the dollar to 8,500 -- and the Jakarta Stock Exchange gained 9.3 points -- on reports that the government was nearing a deal with the International Monetary Fund on a revised bailout plan that would give top priority to restoring some value to the currency. "Darn -- I knew I should have changed money last week," one Jakarta-based reporter moaned on hearing the news.
Of course even at 8,500 to the dollar, the rupiah is still down to less than one-third its rate before the economic crisis began last August, when one U.S. dollar bought 2,500 rupiah and Jakarta was considered one of the moderately priced capital cities in Asia.
When the collapse came, many stores were left holding merchandise priced well out of the range of average working Indonesians -- but laughably cheap to anyone carrying dollars, yen, or other hard currency.
For example, at the Sarinah department store, Izod label pullover shirts carry a U.S. dollar price tag of $59. But the price on the tag in local currency is 139,000 rupiah, which last week translated into $13.90 -- or a savings of more than $45 off the suggested retail price.
In the same store, a pair of Haggar cotton slacks now sells for 109,000 rupiah, a little more than $10. A Ralph Lauren polo shirt is 68,000, or $6.80 at the 10,000-to-1 rate. The matching Ralph Lauren baseball cap goes for $2 and change.
Despite the bargains, Jakarta is not packed with shoppers. In fact, most stores are largely empty. Tourism has slumped, with a recession grounding most intra-Asian leisure travel and news reports about the return of a debilitating haze from uncontrolled forest fires. Also, an upsurge in violence last month, with rioters attacking ethnic Chinese, has scared away potential shoppers from Singapore and Hong Kong.
At the multistory Plaza Indonesia shopping center, bored sales clerks at the Gucci and Versace boutiques seem to spend most of their time rearranging items on shelves, and waiting forlornly for a customer doing more than mere browsing. Most brand-name boutiques have restocked their shelves since the currency collapse and now either charge in dollars for their designer goods, or have raised prices to reflect the new reality.
But whatever is left of last year's stock is still being sold now at giveaway prices.
The good times for foreign shoppers could be over soon if the new agreement with the IMF includes, as the government insists, a new mechanism to bring down the exchange rate.
For its part, the IMF is remaining mum while the talks continue. But at the Plaza Indonesia last week, a local television reporter spotted IMF Asia-Pacific director Hubert Neiss and his colleagues from the negotiating team doing a bit of shopping of their own at the Sogo department store.
Some last-minute purchases before new exchange rate rules go into effect? A case of insider trading perhaps? The IMF man had no comment. And Indonesian officials are saying stay tuned.
© Copyright 1998 The Washington Post Company