Capital flight

Capital flight

From Merdeka

The Indonesian government should have long prevented wealth
transfer offshore or investment abroad by Indonesian
businesspeople, or "capital flight" as it is otherwise known. But
in the past decade, many Indonesian businesspeople have invested
abroad by setting up joint-venture companies with other
businesspeople abroad or establishing hotels, housing compounds
and so forth. Take for example the fact that an Indonesian
businessman has run a hotel in Texas, United States for quite
some time.

But the case is different regarding the Group of Sudono Salim,
which, due to the cleverness of Anthony Salim, has for a long
time established a joint-venture company in Singapore under the
name QAF Ltd. Another example is the Lippo Bank Group, owned by
one of Indonesia's private bankers, Muchtar Riady, which has set
up a bank in wealthy U.S. Due to their close connection with the
Indonesian head of state and their sharp business acumen, Muchtar
Riady's group have established close relations with Bill Clinton,
president of Uncle Sam's country.

The same is also true of the Group of Ciputra, which is known
to have invested abroad for a long time in the property and
construction business. There are scores of other influential
Indonesian businesspeople plus lower-level businesspeople who
have transferred their money abroad. There is no reason to be
surprised about this as Indonesian government regulations do not
prohibit Indonesian citizens from transferring their money
abroad, particularly in the free foreign exchange policy adopted
by the government or the capital market freedom in the
relationship between Indonesia and other countries.

But despite the money transfer practices abroad which have
been taking place in the last two decades, Indonesia can maintain
stability in its development undertakings with industries growing
and proliferating rapidly. As part of the Indonesian nation, we
are proud of and impressed by the Indonesian government's well
concerted strategies. During the Old Order administration, some
of our businesspeople were also engaged in capital flight
practices despite quite strict prohibition imposed by the then
government regarding money transfer overseas.

Let me cite an example. If at the time as a national private
businessman I had not been smart enough in doing my business, I
would not have been able to export such commodities as rubber and
pepper. But I had good relations with businesspeople in
Singapore, who had capital and access to the banks there, and
could therefore purchase the commodities in Indonesia and
dispatch them to Singapore. Had we expected to get assistance
from financially poor Indonesian banks then, we would obviously
not have been able to export rubber and pepper to Singapore.

H.G. MALIKMASS

Jakarta