Batas: Where kina is king


IN RECENT years we have got used to reading news about how the PNG kina is dropping in value or how the Bank of PNG does not have enough foreign currency to meet the demand for businesses to exchange kina to pay all their overseas debts in foreign currencies.
We have become used to thinking of the kina as a weak currency. But there is one place where kina is king — at the batas (“border”) market just over the international border in Skouw, in the Indonesian province of Papua opposite Wutung in West Sepik.
This market is so popular that the Indonesian President Joko Widodo flew from Jakarta to officially open the new expanded market venue last October.
Every week hundreds of people cross the border go there to get cheap bargains and stock for their Vanimo trade stores, or to sell market produce, especially betel nut, to buyers on the other side.
The vast majority of these transactions are in kina, not Indonesian rupiah.
Even an hour’s drive from the border in Jayapura City itself, some business people prefer kina.
When I got a haircut in Jayapura, for example, the barber knew I had just come from PNG and asked if I could pay in kina rather than the local currency.
Undoubtedly one reason for this is the weakness of the rupiah, which has dropped in value even faster than the kina.
Each year a kina (or dollar or pound) buys more rupiah than the year before.
This means that persons in Indonesia keeping kina or dollars in their pocket will see it growing in value in terms of rupiah.
It also means that a merchant buying betel nut, Twisties, or Ox & Palm from PNG (all popular with Jayapura residents) will end up having to spend more rupiah to pay the kina price that Papua New Guineans are asking.
With Papua New Guineans buying expensive goods like electronic goods and fuel and Indonesians buying relatively inexpensive goods like Twisties and betel nut, the flow of kina to Indonesia is much greater than the flow of rupiah to PNG.
This means that when merchants on the Indonesian side exchange their kina for rupiah, the banks accumulate a large amount of kina.
This imbalance in international trade has ended up with the Indonesian central bank having what it believes to be an unhealthy surplus of kina.
As a result, the Indonesian government has erected signs in Bahasa Indonesia, English, and Tok Pisin at the border stating that only Indonesian money is to be used in Indonesia, and officials have told merchants that they should use rupiah, rather than kina, in their shops.
They have also had ATMs erected at the border so travellers who do not want to use local money changers can use cards to withdraw in rupiah from their PNG or other International accounts.
But like merchants everywhere, shopkeepers at the border market want to please their customers.
They learn Tok Pisin and keep on accepting kina as payment to make their Papua New Guinean customers feel comfortable.
A few merchants who buy PNG products do try to follow their government’s policy and insist on using rupiah.
One woman was quoted in a Jayapoura newspaper as saying in Bahasa Indonesia, “This is Indonesia and we should use our own money in our own country”.
She buys PNG betel nut and sells it for three times the price in Jayapura.
Her Jayapura customers pay her in rupiah, so of course it is in her interest to pass on those rupiah to the Papua New Guineans who come to the border and are eager to sell PNG betel nut to her.
But she is in a minority; most commerce at the border continues to be in kina, no matter what the Indonesian government says.
Until the markets on the PNG side of the border are more developed and shopping in Vanimo becomes more attractive to people from Jayapura, Indonesian banks will continue to accumulate kina and the rupiah is unlikely to be able to compete with the kina.
For the foreseeable future, in at least this region, the kina will continue to be king.

  • Prof Craig Volker is a linguist and writes the monthly Language Toktok column in Weekender.

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