Indonesia remittances may drop 5-10 pct in '09-agency

Source: Thomson Financial News, Published by Forbes.com, 02.03.09

JAKARTA, Feb 3 (Reuters) - Indonesia expects remittances from its overseas workers to drop by up to 10 percent in 2009 as the global economic crisis forces firms to cut costs, the head of a state agency in charge of migrant workers said on Tuesday.

The agency said Indonesians working abroad sent home about $8.2 billion last year, an estimate based on an assumption that that 70 percent of the income received by registered workers was sent back. The figure could reach up to $10-11 billion if it included remittances from unregistered workers, the agency said.

'I think the sectors heavily hit by the crisis are manufacturing and construction. Since only few of our migrant workers are in those sectors, remittances may decline by 5-10 percent next year,' Jumhur Hidayat told Reuters.

Some analysts say the government should step up efforts to attract more stable sources of hard currency such as workers' remittances to help reduce volatility of the rupiah currency , driven by capital flow swings.

The rupiah gained 0.4 percent to 11,650 per dollar on Tuesday with traders citing official intervention in support of the currency, which slid as much as 5 percent on Monday.

Hidayat said his agency had 4.3 million Indonesian overseas workers registered last year, with 65 percent working as domestic help. The number of unregistered workers may exceed 1.5 million, he said.

'We notice that 50-60 percent of firms which have cut their production were in the manufacturing sector. So we try to sustain demand for our migrant workers by introducing new markets, such as the Middle East, and new jobs,' he added. (Reporting by Dicky Kristanto; Editing by Tomasz Janowski) Keywords: INDONESIA REMITTANCES/