Foreign investors continue to ignore RI<\/p>\n
JAKARTA (JP): Indonesia's risk premium has changed
\nsignificantly over the past two years but the country has yet to
\nregain the interests of large international investment houses, a
\nsenior official from the Hongkong and Shanghai Banking
\nCorporation (HSBC) Ltd. observed here.<\/p>\n
HSBC's chief regional economist for the Asia Pacific region
\nJohn Woods said big investment houses from the United States and
\nEurope had ignored Indonesia and let it fall off their investment
\nradar screens.<\/p>\n
\"Because it has slipped from the radar screen, there is no
\naggressive research as such and accordingly opinions are
\ntypically being formed at the investment level by the flow of
\nnews as generated by the media,\" he said.<\/p>\n
Woods said that news carried by the media had served as an
\ndeterrent to the country's investment image as it unfairly
\npresented negative information about the country's investment
\nprofile by reporting one-sidedly.<\/p>\n
The media had not always taken the view of both sides, and it
\nwas so often that the voice of the Indonesian government about
\nthe country's investment situation was not well represented in
\nthe media, he added.<\/p>\n
\"It is (the view of) the man on the street that he is
\ntypically more interested in sensational views of the world that
\nof investment opportunities,\" he told an economic seminar
\nsponsored by HSBC.<\/p>\n
Consequently, Woods added, investors' decisions were being
\noverly influenced by the angle of news-flow. And this had
\ndeprived investors of a chance of booking good investment yields,
\nhe added.<\/p>\n
The real fact was that Indonesia's risk profile was a lot
\nbetter than many investors believed, he said.<\/p>\n
The premiums in terms of the country's interest rates and
\nfixed income spreads -- on a relative and absolute basis -- have
\nshown a significant improvement and a stable trend, particularly
\nin the last six months, according to Woods.<\/p>\n
But this condition is not necessarily what the Indonesian
\ngovernment is communicating aggressively to investors.<\/p>\n
\"We are looking for Indonesia to take an initiative to more
\nproactively communicate the country's stabilizing story,\" he
\nsaid.<\/p>\n
The government should undertake regular road shows to
\ncommunicate their side of the story to investors, he added.<\/p>\n
State Minister of Investment and State Enterprises Development
\nLaksamana Sukardi, another speaker at the seminar, called on
\ninvestors to positively judge the general condition of Indonesia
\nwhere a freely-elected government and legislature was in place.<\/p>\n
He admitted, however, that the country was still learning and
\nadjusting to the new circumstances.<\/p>\n
So if there was \"noise\" please understand that it was the
\nconsequence of the democratization process, he said.<\/p>\n
Laksamana added that the media should learn that as well as
\nusing their freedom they should see things more objectively and
\noptimistically.<\/p>\n
\"To be optimistic is to see as an opportunity in a problem,
\nnot a problem in an opportunity,\" he said.<\/p>\n
Laksamana was optimistic about an improvement in the
\ninvestment climate in Indonesia where a level playing field would
\nbe available for both local and foreign investors.<\/p>\n
He said the government was now drafting a bill on investment
\nwhich would totally remove discriminatory treatment on foreign
\ninvestors.<\/p>\n
Laksamana said the bill would amend the 1968 domestic
\ninvestment law and the 1967 foreign investment law.<\/p>\n
As there would be no discrimination against foreign investors,
\nLaksamana said they would also be required to bear social
\nresponsibility just like their local counterparts did.<\/p>\n
\"The bill will ask one thing from investors, both local and
\nforeign: To be socially responsible investors,\" he said.<\/p>\n
The bill, Laksamana said, would also require both local and
\nforeign investors to protect the environment in their operations,
\nso that they would not create problems for the country.<\/p>\n
It will also require local and foreign investors to respect
\nhuman and labor rights.<\/p>\n
And lastly, Laksamana said, the bill would require investors
\nto uphold good corporate governance in their operations.<\/p>\n
Woods hailed the government's effort to provide equal
\ntreatment to domestic and foreign investors.<\/p>\n
\"If you have a price for one part of the investment community
\nand a different price for another part of investment community,
\nit leads to market inefficiency,\" he said.<\/p>\n
He said the country needed a single piece of regulatory
\narchitecture that was transparent in its disclosure and fair in
\nsuch a way that it would impact on market players.<\/p>\n
HSBC's Head of Asian Debt Product Sales Sharad Desai said
\ndomestic investors played a more important role now as local
\ncompanies, hurt by the steep depreciation of the rupiah,
\npreferred local funding.<\/p>\n
He said overseas borrowing would provide a funding mismatch
\nfor local companies which relied mostly on the domestic market as
\nthey received revenues in rupiah. (udi)<\/p>",
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"sponsor": "Okusi Associates",
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