Wed, 23 Feb 2000

25% of funds deposited overseas has returned

JAKARTA (JP): Indonesian Business Development Council chairman Sofyan Wanandi estimated on Tuesday a quarter of the funds deposited overseas by local businesspeople had returned to the country and been reinvested.

Speaking during a break in a seminar on Indonesia's economic recovery in 2000, Sofyan predicted all the funds taken out of the country during the economic crisis would return to Indonesia in one to two years.

"At least 20 percent to 25 percent of the money which flowed out of the country has returned, and I believe in the next one or two years all the money will come back," he said.

He estimated that total domestic funds deposited overseas reached around US$15 billion -- far below some estimates which put the figure at $80 billion. And of that $15 billion, Sofyan guessed $3 billion had been returned to Indonesia.

Those returning their money, he said, were medium-sized businesspeople who used the funds to finance the expansion of their businesses, particularly in the retail sector.

Sofyan noted the retail sector had been bullish recently despite a lack of banking credits to support its growth.

"The development of this (retail) sector indicates capital inflow," he was quoted by Antara news agency as saying.

Meanwhile, Sofyan predicted that large business owners would continue to keep their money outside of Indonesia because "most of them owe massive debts to the Indonesian Bank Restructuring Agency".

He also said large businesspeople did not yet want to return their money to Indonesia because they still were wary of security in the country.

Sectors that he sees as currently insecure for investment include plantations and agriculture. But he did not supply reasons for this assessment, only saying, "Businesspeople in these sectors still refrain (from investing) because they are still afraid and traumatized by past violence."

In addition, Sofyan said the country's business climate was not yet conducive for new investment because of the still weak law enforcement.

While Indonesians are still reluctant to make new investments, Sofyan said it would take even longer for foreigners to invest in the country. "They still have a wait-and-see attitude."

Nevertheless, he expressed confidence both locals and foreigners would begin investing in the country when the economy showed significant signs of recovery, and security and law enforcement improved. (rid)