Fri, 18 May 2001

Business sentiment index turns to pessimistic

JAKARTA (JP): The Business Sentiment Index (BSI) continued on a downward trend over growing fears that political mayhem might further affect business progress, according to a survey by Danareksa Research Institute.

The research agency said on Thursday that the BSI index in the February-March period declined by 1.3 percent to 113.8 from 115.3 in the previous period.

"Optimism of the chief executive officers (CEO) for their business remains but their confidence skidded on fears that a worsening political situation could end in anarchy, ruining their business prospects," the research agency said.

It further revealed that the Present Situation Index ended unmoved at 107.5 due to continued uncertainty on the political front.

The Expectation Index also slipped as CEO's sentiments about their business outlook were battered by the government's inability to drag the country out of three years of political and economic woes, the agency said.

The research agency said that on the back of the decline in business sentiment was the jittery business environment underscored by the slide in the business confidence in the government (BCGI) index that cracked below 100, with pessimism edging optimism.

"With the BCGI falling to 99.4 from 104.6, most businessmen are no longer optimistic about the government's ability to ensure a conducive business environment," it said.

According to the survey, CEOs were pessimistic about the government's capability to expand the size of their respective markets which allowed them to get a larger sales value.

The survey also indicated that CEOs doubted the government's ability to stabilize the economy through its policies which would enable them to keep a lid on their costs.

They questioned the government's ability to maintain public utilities, including infrastructure for them to run their business, it further said.

In addition, the survey disclosed that the CEOs were pessimistic that the government could create a safe and orderly environment for their business.

The businessmen also felt uncertain about the government's capability to enforce the law to ensure they were not hurt financially by unfair business practices.

"The government has failed to provide a business environment that was expanding, stable, supportive, secure, and fair," the research agency remarked.(03)