'Bomb set to rock newly revived economy'<\/p>\n
Dadan Wijaksana, The Jakarta post, Jakarta<\/p>\n
The deadly bomb blast at the JW Marriott Hotel in Jakarta on
\nTuesday will undoubtedly hurt confidence in the an economy that
\nhad just started to recover as nervous investors and tourists
\nshun the country, experts said.<\/p>\n
"Investors are shocked from the psychological point of view.
\nThe bombing will shatter the confidence of investors in the
\neconomy, which has just started to recover from the Bali
\nattacks," Raden Pardede of the Danareksa Research Institute told
\nThe Jakarta Post.<\/p>\n
The rupiah closed on Tuesday 2.1 percent lower against the
\nU.S. dollar from the day before, while the Jakarta stock index
\nlost even more ground to end the day at 3.1 percent lower than
\nMonday's close.<\/p>\n
"This had to happen just when we were experiencing a rise in
\nindirect investment, such as in stocks and the bond market.<\/p>\n
"I could see that there was also direct investment waiting to
\ncome here, but all this will be disrupted by the bombing," said
\nAburizal Bakrie, the chairman of the Indonesian Chambers of
\nCommerce and Industry (Kadin).<\/p>\n
The two agreed that the attacks had the potential to further
\nslow down the pace of the country's economic recovery.<\/p>\n
Analysts also said that the country's hard gained
\nmacroeconomic stability might be adversely affected by the bomb
\nblast unless the authorities took serious measures to mitigate
\nthe impact.<\/p>\n
Since the start of the year, sentiment in the country's
\nmacroeconomy had been improving, with the rupiah finally
\nstabilizing, supported by capital inflows from foreigners seeking
\nhigher returns amid low global interest rates and weakening
\ndollar assets.<\/p>\n
In order to help minimize the impact, Raden called for a swift
\nresponse from the government to provide some respite for shocked
\ninvestors, and at the same time assure them of its commitment to
\ncracking down on terrorism.<\/p>\n
"Market players and investors are now waiting to see how the
\ngovernment will react to this," he said.<\/p>\n
There are at least two things that the government could do to
\nhelp mitigate the impact, Raden said: "One involves a security
\nand legal approach, while the economical approach is the other."<\/p>\n
The security approach meant that the government had to be able
\nto show its seriousness in finding the culprits behind the attack
\nwhile also making sure that such a bombing would not happen
\nagain.<\/p>\n
"Tough gestures from, let's say, the President, would be
\nhelpful in rebuilding confidence," Raden said.<\/p>\n
As for the economic approach, the government should make the
\nmost use of the current budget to provide a further stimulus for
\nthe economy to help it weather the effects of the blast.<\/p>\n
Dradjad Wibowo, an economist with the Institute for the
\nDevelopment of Economics and Finance (Indef), was also of the
\nopinion that the authorities could help lessen the impact.<\/p>\n
Regarding the monetary authority, Dradjad stressed the
\nimportance of the central bank closely guarding the movement of
\nthe rupiah to avoid further panic selling or speculation.<\/p>\n
Containing the rupiah within a relatively stable band, he
\nsaid, would be crucial as it this would serve as a benchmark for
\nthe country's macroeconomics indicators.<\/p>",
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