Business giants raise concerns over rupiah

Business giants raise concerns over rupiah

Rendi A. Witular, The Jakarta Post/Jakarta

The volatile rupiah exchange rate against the greenback remains a
great concern for foreign investors operating in Indonesia, as
any uncertainty in the economy could cause unnecessary downturns
in their businesses.

In a rare closed-door meeting with President Susilo Bambang
Yudhoyono on Friday, 22 top executives of major foreign companies
or their local arms expressed their concern over the issue and
were seeking direct input on the economic condition from the
president.

The Indonesian Chamber of Commerce and Industry (Kadin) vice
chairman for international economic cooperation, John A.
Prasetio, the moderator in the meeting, told The Jakarta Post of
the deep concerns of businesspeople and the need to create a
policy that ensured the stability of the rupiah against the U.S.
dollar.

"The businessmen have expressed their optimism over investment
opportunities in Indonesia. However, they are still concerned
over uncertainty in the rupiah exchange, which they say was
'chronically weak'," he said.

"They fear that unless there are immediate and substantial
changes in policy, a sharp depreciation in the rupiah will happen
again in the future, thus, creating uncertainty in the operation
of their businesses here," he added.

The rupiah started to nosedive in August when it slumped to a
four-year low to around Rp 11,000 against the dollar, despite
optimism from the Cabinet's economic team at that time that the
rupiah was going to stay at around Rp 9,500.

The slump was triggered by the soaring global oil prices --
which passed the US$70 per barrel mark on Aug. 30 -- that
eventually dragged down the stability of the fiscal and monetary
sector.

The rupiah has been picking up again this week, following
Susilo's announcement on his new economic line-up -- particularly
the comeback of former finance minister Boediono as chief
economic minister -- thus boosting market confidence.

In the meeting, the businesspeople also highlighted problems
such as strange regulations, lack of contract sanctity involving
the government, state enterprises and the private sector, as well
as unfavorable tax and labor laws.

The need to improve governance within the bureaucracy was also
emphasized in the meeting, with the executives suggesting the
president immediately replace "unproductive" bureaucrats who
often disrupted the operation of private sector companies.

"There is also a concern from the businesspeople over the slow
process in replacing troublesome bureaucrats in several key
institutions, which have caused ineffective governance and
discouraged investment," said John.

Boediono pledged that he would take concrete and immediate
actions to follow-up on the suggestions and complaints from the
businesses so the government would not appear to be a "no-action-
talk-only" entity.

"Should there be no real action to address the
businesspeople's complaints in the foreseeable future, the public
is entitled to be cynical," he said in a post-meeting press
conference.

To cater to investors' needs, both local and foreign, they
will have a regular meeting with Susilo every four months at
separate events starting in January.

I-box
Foreign company executives attending the meeting:
Name Company Position
Peter Coleman ExxonMobil Indonesia President Director
Francisco Noriega Cemex Indonesia Chief
representative
Giuseppe Nicolosi Ernst & Young CEO

Indonesia
Hans-Josef Schill Bayer Indonesia CEO
Leonard Van Hien Jardine Matheson Country chairman

Group Indonesia
Sachio Yamazaki Toyota Motor President Director

Manufacturing Indonesia
Michihiko Kanegae Sumitomo Indonesia President Director
J. Francois Fichaux BNP Paribas Indonesia Country director
Christopher K. Cornille Cabot Indonesia President Director
John Harrison Asuransi Jiwa President Director

Manulife Indonesia
Low Sin Leng Sembcorp Industry Senior executive

director
Luigi Carlo Gastel Pirelli-Telecom President Director

Italia Group
Martin King HM Sampoerna President Director
Richard Baker Ford Motor Indonesia President Director
Simon Wilson Macquarie Bank Vice President
Stuart Dean GE International President Director

Operation
Yasuo Ichimura Itochu Indonesia President Director
Tim Leissner Goldman Sachs Senior managing

director
Joe C. Bartlet American Chamber of President

Commerce and Industry
Koki Hirota JBIC Chief
representative
Kosuke Imashimizu Jetro Jakarta President
Peter Fanning International Business President

Chamber

Source: State Secretariat