The weakening of the rupiah exchange rate against the US dollar resulted in a number of manufacturing industry sectors, such as the food and beverage industry as well as the textile industry and domestic textile production, being affected. A weakening exchange rate also has the potential to reduce people's purchasing power and demand. The rupiah exchange rate is currently weakening or depreciating due to global financial market uncertainty. Quoting the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate on Tuesday (17/10/2023) evening, the rupiah exchange rate was at Rp. 15,718 or weakened by 1.49 percent compared to the end of September 2023. Based on the current calendar, the rupiah exchange rate was also recorded as weakening 0.80 percent compared to the end of December 2022.

Most of the food and beverage industry's production needs, such as raw materials and capital goods, are still imported.

General Chairman of the Indonesian Food and Beverage Entrepreneurs Association (Gapmmi) Adhi S Lukman in Jakarta, Tuesday (17/10), said that the impact of the depreciation of the rupiah was felt by food and beverage industry players in the country. This is because most of the food and beverage industry's production needs, such as raw materials and capital goods, are still imported.

"Aside from raw materials and capital goods, there are also other costs, such as logistics and ships. "All of that, right, is in the form of US dollars, which then causes an increase, both in terms of production, cost of production, as well as logistics and distribution costs," said Adhi.

Some imports of raw materials needed by the food and beverage industry include wheat, sugar and soybeans. Even though the impact of the strengthening of the US dollar has not been felt too significantly, industrial players are forced to spend more than usual to buy raw materials for production needs.

In 2022, food and beverage industry players will still be able to obtain refined sugar as a production raw material at a price range of IDR 8,000-IDR 9,000 per kg. Now, the price of refined sugar has reached IDR 13,000 per kg.

Adhi added that medium and large industrial players tend to choose to contain the burden of production costs by cutting profit margins while observing the development of the weakening trend in the rupiah exchange rate. On the other hand, the impact of the significant weakening of the rupiah was felt by small industry players, forcing them to adjust the prices of their goods.

Chairman of the Indonesian Textile Association, Jemmy Sastraatmaja, said that the depreciation of the rupiah also had an impact on textile and textile product (TPT) industry players. This situation is increasingly putting pressure on textile industry players who are currently facing domestic market protection problems related to the rampant imports of second-hand clothing and cheap textile goods.

"It would be better if the exchange rate was stable because the majority of components of raw materials are multiplied by the US dollar exchange rate," he said.

Currently, Indonesia is developing cellulose fiber to meet the raw material needs of the domestic textile industry. One of them is viscose fiber which comes from acacia.