Business community seeks help during war<\/p>\n
A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
Business leaders demanded on Friday the government and the
\ncentral bank take immediate action to mitigate the impact of the
\nIraq war on the country's business sector and the overall
\neconomy.<\/p>\n
These measures might include tax breaks and a loosening of
\nBank Indonesia's monetary and banking policies.<\/p>\n
"The government needs to take concrete and swift measures to
\ncontain the impact of the Iraq war on our economy," Aburizal
\nBakrie, chairman of the Indonesian Chamber of Commerce and
\nIndustry (Kadin), said during a press conference attended by a
\nnumber of business leaders.<\/p>\n
"Even before the war broke out, local industries were already
\nsuffering," said the chairman of the Indonesian Textile
\nAssociation, Benny Soetrisno.<\/p>\n
He said many textile companies had gone bankrupt over the past
\nyear because of shrinking overseas markets and domestic problems.<\/p>\n
"Most textile deliveries to countries in the Middle East have
\nbeen canceled (because of the war)," said Benny, adding that
\nwithout immediate help from the government more companies would
\ngo under, aggravating the country's unemployment problem.<\/p>\n
Textiles are one of the country's most important non-oil and
\ngas exports, and the industry employs a huge number of people.<\/p>\n
The tourist industry is also asking for government help,
\nparticularly in ensuring the safety of foreign tourists.<\/p>\n
"Australians, for example, are reluctant to come to Indonesia
\nbecause they are scared of a possible backlash here," said
\nindustry leader Hariyadi B. Sukamdani.<\/p>\n
Australia is among the countries supporting the U.S. in the
\nwar in Iraq. There have been concerns that anti-Western
\nprotesters here will target people from countries supporting the
\nU.S.<\/p>\n
Tourism is also a major source of foreign exchange revenue for
\nIndonesia. The industry, however, has seen falling tourist
\narrivals since the Oct. 12 Bali bombings.<\/p>\n
Business leaders said the prospect of slowing exports was
\naggravated by the weak purchasing power of people at home, thus
\npreventing businesses from expanding their markets here.<\/p>\n
Analysts have said that if the war drags on it would worsen
\nthe already fragile economies of the U.S. and other developed
\nnations, most of which are Indonesia's main export markets.<\/p>\n
Kadin has proposed a relaxation of the tax policy, allowing
\nbusinesses to delay tax payments to help them maintain cash flow.<\/p>\n
"The payment of corporate tax and value added tax could be
\ndelayed for six months, for example," said Aburizal.<\/p>\n
Aburizal also said the central bank should continue lowering
\ndomestic interest rates and easing bank rulings to allow banks to
\nprovide more and cheaper loans to the real sector.<\/p>\n
He suggested that the requirements on capital adequacy ratio
\n(CAR) and nonperforming loans (NPLs) could be loosened.<\/p>\n
CAR is the ratio between a bank's capital and risk-weighted
\nassets such as credits, while NPLs are the ratio between loans
\nthat have turned sour and outstanding loans. Banks are required
\nto have a minimum CAR level of 8 percent and NPLs of no more than
\n5 percent.<\/p>\n
Banks remain reluctant to increase lending on the fear that
\ntheir capital condition could fall below the central bank's
\nrequirements and that their NPLs could rise.<\/p>\n
The chairman of the National Economic Recovery Committee,
\nSofyan Wanandi, said the government must also spend more money to
\nfinance labor intensive projects to help increase the people's
\npurchasing power.<\/p>\n
"The government must accelerate the implementation of
\ninfrastructure projects ... to help spur the economy," he said.<\/p>\n
Businessman Thomas Dharmawan urged the government to curb
\nillegal fees, which have created a high-cost economy and have
\naffected the competitiveness of local industries.<\/p>",
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