Businesspeople may regain confidence in six months

LONDON (JP): Indonesia, which was hit by anarchic riots on July 27, is expected to regain the confidence of foreign investors within six months, says the chairman of the Indonesian Chamber of Commerce and Industry.

"The riots, which involved arson and bomb threats, have affected business confidence but we are sure that the security forces will be able to fully restore order," Aburizal Bakrie told reporters here Thursday.

Aburizal, here to test the prototypes of the Bakrie Group's cars for production in Indonesia, said foreign investors had raised questions about political stability following the riots involving the rival camps of the Indonesian Democratic Party.

The riots erupted on July 27 when supporters of Soerjadi, the new PDI chairman elected in a government-sponsored congress in June, raided the party's headquarters in Jakarta to wrest control from its democratically-elected chairperson Megawati Soekarnoputri.

Aburizal said that if riots do not flare up again, foreign investors will regain confidence in Indonesia within six months.

"Investors see Indonesia as an attractive export base in the ASEAN Free Trade Area in 2003 with a market of 500 million ," he said.

Aburizal, who is also chairman of the Bakrie Group, said that differences of opinion among political institutions would not affect the business climate as long as they channeled them through the right mechanisms.

"But if the differences are expressed in an anarchic way, they will surely hurt business confidence," he said.

He acknowledged, though, that apart from political uncertainty, the problems of inconsistent policies, market distortions and corruption are also detrimental to investment.

"Maintaining consistent policies and uprooting corruption is therefore just as important as creating political stability to stimulate investment," he said.

Citing an example of policy inconsistency, he pointed to the Timor car, which even though it is made at the Kia Motor plant in South Korea, is classified by government regulations as a "national" car, and is thereby exempted from import duty and the luxury tax.

The government, through a presidential decree, has licensed PT Timor Putra Nasional, a company controlled by President Soeharto's youngest son Hutomo Mandala Putra, to produce its "national" car at the Kia Motors plant until its assembly plant comes on stream in West Java. (riz)