Investors huddle with 'powerful partners'<\/p>\n
JAKARTA (JP): Investors cling to politically well-connected
\npartners to safeguard against upheaval, despite the fact that
\npolitical risks are highly unpredictable, an observer says.<\/p>\n
Economist Sri Mulyani Indrawati of the University of Indonesia
\nsaid yesterday at a discussion on investment and political risks
\nthat the magnitude of investment was a key factor in why
\ninvestors attach to powerful partners.<\/p>\n
\"This is what investors do to reduce political risks,\" she
\nsaid at the discussion held by the Center for Information and
\nDevelopment Studies (CIDES), a think tank of the Association of
\nIndonesian Moslem Intellectuals (ICMI).<\/p>\n
She cited the planned construction of a 95-kilometer bridge,
\nconnecting the Malaysian peninsula and Indonesia, by a private
\nconsortium of companies from both countries, as proof of major
\ninvestors choosing only politically well-connected partners.<\/p>\n
The Indonesian consortium, PT Malindo Transmadu, is headed by
\nSiti Hediati Heriyadi Prabowo, President Soeharto's second
\ndaughter. Malaysia is represented by Renong Sdn. Bhd.<\/p>\n
There has been no information yet as to how much the project
\nwill cost.<\/p>\n
The other speakers at the discussion were Indria Samego and
\nDidin S. Damanhuri of CIDES. The discussion was held to mark the
\nlaunching of the third volume of the annual Journal of Indonesian
\nProfiles, which consists of writings on domestic politics and the
\neconomy.<\/p>\n
Sri said no one could ever exactly calculate political risk,
\nwhich was highly uncontrollable, unmanageable and unpredictable.<\/p>\n
She noted that other than from domestic politics, investment
\nrisks could also result from globalization -- meaning that a
\nsituation of a particular country could cause a situation in
\nanother country.<\/p>\n
Sri cited the recent fall of some ASEAN currencies as an
\nexample of the interconnectedness of countries when it comes to
\nbusiness and political risk.<\/p>\n
Indria and Didin shared Sri's view and agreed that no country
\nwas free from another country's influence. Domestic, political
\nand economic matters have been globalized, Didin said.<\/p>\n
International exposure -- in the form of research by
\ninternational institutions, for instance -- would affect the
\nlevel of investment in a particular country, Didin said.<\/p>\n
He cited the Hong Kong-based Political and Economic Risk
\nConsultancy (PERC) survey, disclosed in March, that rated
\nIndonesia as the most corrupt nation in ASEAN.<\/p>\n
He noted how monopolies and nepotism were growing to such an
\nextent in Indonesia that they might hamper foreign investment.<\/p>\n
However, he expressed optimism that international pressure and
\nmass media control would eventually help usher in political and
\neconomic reforms in Indonesia.<\/p>\n
Indria pointed out that the market economy was behind the
\ndrive for reform in many countries.<\/p>\n
In this interdependent world, reform would sooner or later
\ntake place in market economy-oriented countries, he said.<\/p>\n
\"They need to open up in order to take advantage of the world
\neconomy,\" Indria said, citing some Eastern European countries who
\nhad to adjust and open up in order to \"integrate\" with the world
\nmarket economy.<\/p>\n
He also said the only way to achieve political and economic
\nreforms was through democratization.<\/p>\n
\"Democratization is the word, whether you like it or not,
\nwhether you are ready or not, it will come,\" Indria said. (10)<\/p>",
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