The rupiah exchange rate remained on a weakening trend until Thursday (May 21, 2026). Based on trade data, the rupiah reached Rp17,600 per US dollar at the morning market opening and weakened again by around 0.31% to Rp17,655 per US dollar at 11:01 a.m. Western Indonesian Time. This occurred amid Bank Indonesia's (BI) decision to raise its benchmark interest rate by 50 basis points to 5.25%.
Redma Gita Wirawasta, Chairman of the Indonesian Filament Fiber and Yarn Producers Association (APSyFI), assessed that the rupiah's weakening was not only influenced by short-term capital outflows and government debt interest payments, but was also closely related to the condition of the national manufacturing industry.
According to him, the industry's high dependence on imported raw materials, particularly intermediate raw materials, contributed to increasing pressure on the rupiah exchange rate. This situation increased the need for foreign exchange for imports and impacted the stability of the domestic currency.
On the other hand, the weakening rupiah has also put further pressure on the textile and textile products (TPT) industry. APSyFI has also urged the government to implement stricter foreign exchange policies to prevent further pressure on the industry, especially after the increase in the BI benchmark interest rate.
Redma supports BI's policy of limiting foreign exchange without an underlying document to a maximum of US$25,000. He even proposed linking the underlying document to tax payment documents to limit the scope of illegal importers.
Furthermore, he believes BI can encourage import substitution through a strict foreign exchange policy, similar to that implemented by India, which limits foreign exchange purchases per company to encourage the use of domestic raw materials.
Based on data from the Central Statistics Agency (BPS), Redma stated that the TPT sector's trade balance has long been in deficit. Although still positive in value, when calculated together with illegal imports, imports of machinery and spare parts, and imports of petrochemicals and other auxiliary chemicals, the sector's foreign exchange flow is said to have experienced a deficit of around US$2 billion.
He added that approximately 15 years ago, the textile and textile industry sector recorded a surplus of around US$8 billion, but this has now turned negative. Therefore, the government needs to calculate in detail the actual import raw material needs of each company, taking into account domestic production capacity.
According to Redma, this strategy has the potential to reduce imports of intermediate raw materials in the textile and textile sector by around US$5-6 billion per year if implemented gradually and based on an analysis of the industrial value chain.
Meanwhile, Agus Riyanto, the Indonesian Textile Association (KAHMI Tekstil), highlighted the low utilization of the textile and textile industry due to years of uncontrolled import policies.
Agus believes that dumping and under-invoicing practices by importers have gradually weakened domestic producers and contributed to pressure on the rupiah. To maintain exchange rate stability, he proposed that Bank Indonesia (BI) and the Ministry of Finance intervene in industrial and trade policies, such as by strengthening the policy on mandatory Foreign Exchange from Export Proceeds (DHE) from natural resources.
However, Agus believes that this policy has the potential to face resistance from parties who have benefited from import practices. He also highlighted the assumption that the national industry always lacks raw materials, which is often used as a reason for issuing import recommendations.