Businessmen call for restoration of order, security

JAKARTA (JP): The Indonesian business community urged President B.J. Habibie on Tuesday to immediately restore order and security in the country as a prerequisite for businesses to resume normal operations.

Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Aburizal Bakrie said the government had to stamp out the rising incidence of rioting and looting which had been endangering businesses.

"A feeling of safety is very essential for businesses to resume normal operations," he told reporters after meeting Habibie.

The chamber's appeal came after almost one week of rioting on the island of Ambon that left more than 50 people dead and hundreds of buildings and cars damaged with material losses estimated at around Rp 500 billion.

"I am glad to tell you that the President has pledged the government will act firmly in dealing with any rioting and looting," he added.

The country has been overrun by a seemingly endless series of outbreaks of unrest and violence since the fall of the former dictator Soeharto last May. Analysts believe that most of these have been instigated by various vested political interests as the June general election approaches.

The wave of social unrest is now becoming an increasingly serious threat to businesses as trucks hauling goods have often been looted, warehouses and properties burned, and customers frightened away.

Export-oriented manufacturing companies have complained that many of their customers overseas have diverted orders to other countries for fear that deliveries from this country would not be able to meet the set schedules.

Many enterprises have folded and those still in operation are taking the brunt of punitively high interest rates, and facing bankruptcy litigation from impatient foreign creditors. The moribund banking industry not only has virtually stopped new lendings but is calling in loans.

The riots have further eroded whatever little confidence there is still in the government and the country's economic prospects and are undermining the painful economic reform programs badly needed to stabilize the economy.

Minister of Investment Hamzah Haz admitted on Tuesday that the unrest had caused great concern among foreign investors.

"If the social, political and security conditions deteriorate this year, foreign investment will further decline," he told reporters following a separate meeting with Habibie.

He was apprehensive that the US$5 billion in foreign investments approved last year might not be realized this year.

"I think foreign investors will wait on the sidelines until after the completion of the general election," he added.

Aburizal also called on the government to make strong efforts to reinvigorate the real sector of the economy.

He said the government had so far focused on macro economic policies and banking reform at the expense of the real sector.

Citing an example, he pointed to the well-publicized government plan to create an export financing agency to help exporters secure financing for the importing of raw materials that had never materialized.

The government has said that the export financing agency will start up operations only after the completion of the bank recapitalization program in March.

Aburizal, however, doubted whether the recapitalization program could be completed as scheduled, given the stiff opposition of the House of Representatives to the proposed budget allocation for the program.

The business leader expressed concern that it might take another one and a half years to settle the non-performing loans of the domestic commercial banks. (rei/prb)