Business confidence index falls in November

JAKARTA (JP): The business confidence index fell by 1.5 percent in November as a result of falling hopes in business prospects, according to a survey made by the Danareksa Research Institute.

There are five factors which have caused the fall in business confidence, Danareksa said in its survey report.

They included the gloomy economic outlook, business uncertainty, political instability and social insecurity, sluggish public investment, and lax law enforcement.

The confidence of business executives in the government's ability to reduce these risks has continued to deteriorate since March 2000, with the latest results falling from 117.0 to 106.6 percentage points in the index. The greatest risk is the lack of law enforcement, with the legal certainty sinking from 95.2 to 84.3 points.

"Most business executives have been pessimistic since September 2000 toward the government's capability of upholding the country's rules and unfortunately it is now getting worse," it said.

Joining the rank of sentiment-denting factors is the insecure atmosphere that discourages businessmen from placing more funds inside the country, with the confidence index slumping from 117.2 to 106.1 percentage points.

CEOs have less confidence (falling from 56.7 percent to 54.7 percent) in overall economic prospects, with the business outlook also on the decline from 45.5 percent to 44.1 percent.

As a consequence of worsening risk factors, confidence among CEOs in the future of their respective companies fell from 67.5 percent to 63.0 percent.

"The decline in confidence among business executives and entrepreneurs on the prospects of their respective enterprises poses a serious threat to the future of the country," Danareksa said in the report.

Their optimism, which is a prerequisite for investment is a major source of hope for the country, as Indonesia desperately needs new investment to keep the reeling recovery on track.

With offshore investors on the sidelines, there is little reason to expect that the nation's economic growth will be sustainable, given the gloomy global outlook and the uncertain economic environment, it said. (03)