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