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