Domestic uncertainties to cloud Indonesia Recovery Fund: Expert<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government will face difficulties attracting sufficient
\nforeign funds into the planned Indonesian Recovery Fund due to
\nvarious domestic uncertainties, according to one economic expert.<\/p>\n
Gadjah Mada University (UGM) economist Sri Adiningsih said on
\nSunday that slow progress in the implementation of the country's
\nkey economic reform programs, legal uncertainty and security
\nproblems would deter investors from participating in the fund.<\/p>\n
\"I doubt that the fund can be as successful as the one in
\nThailand. There's just too many uncertainties here,\" Sri said.<\/p>\n
She pointed out that the government's failure to sell a
\nmajority stake in the state-owned cement producer PT Semen Gresik
\nto Mexican giant Cemex SA as scheduled was a major blow to
\nforeign investor confidence in the country.<\/p>\n
Minister of Industry and Trade Rini Soewandi announced on
\nFriday that the government would launch an Indonesian Recovery
\nFund early next year in a bid to attract foreign funds to help
\nrevive the country's anemic real sector and create jobs.<\/p>\n
Rini said that the fund would be similar to one established in
\nThailand, which managed to raise around US$1.6 billion in cash
\nfrom well known institutions such as the Asian Development Bank
\n(ADB), the World Bank's investment arm the International Finance
\nCorporation, and Merryl Lynch.<\/p>\n
She said that initial funding levels for the Indonesian
\nRecovery Fund were expected to reach $200 million, with some $10
\nmillion to come from the government.<\/p>\n
\"The government can just go ahead with the plan, but the main
\nissue here is how to resolve the uncertainties created by
\nstructural (economic) and security problems,\" Sri said.<\/p>\n
Sri said that the various uncertainties had even triggered a
\nmassive capital outflow that, according to a recent report
\nquoting Bank Indonesia senior deputy governor Anwar Nasution, had
\nreached an average of $10 billion per annum since the country
\nplunged into a combination of economic and political crises in
\n1998.<\/p>\n
\"If the government could manage to at least reduce the capital
\noutflow, it would already be a significant contribution to the
\neconomy,\" she said.<\/p>\n
Separately, a business association executive, who requested
\nanonymity, also doubted the ability of the government to attract
\nforeign financial institutions to invest in the recovery fund
\ngiven the IFC's bad experience dealing with the local legal
\nsystem.<\/p>\n
\"I doubt the IFC will agree to chip in,\" he said.<\/p>\n
The IFC failed to force PT Panca Overseas Finance Indonesia
\n(POFI) into bankruptcy over $13 million in unresolved debts after
\nthe commercial court ruled in favor of POFI.<\/p>\n
Very few creditors have been able to book victories in
\nbankruptcy cases since the country's new bankruptcy law was
\nenacted in 1998.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/domestic-uncertainties-to-cloud-indonesia-recovery-fund-expert-1447893297",
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"sponsor": "Okusi Associates",
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