Foreign capital inflow 'illusory'

Foreign capital inflow 'illusory'

JAKARTA (JP): Foreign capital inflow has yet to reflect a
solid return of investor confidence in the country's economy, a
noted financial analyst said.

Theo F. Toemion said there were indications that foreign
investors actively involved in local markets held close relations
with the government.

"Foreign investors actively buying local shares and the rupiah
were those institutions and individuals that served as the
government's financial advisor. This capital inflow is suspected
of being illusory," Theo was quoted on Wednesday by Antara news
agency.

He termed "artificial" the inflow of foreign funds.

Most foreign investors are upbeat that the establishment of a
new government by the end of the year will speed up the economic
recovery. However, they remain cautious about making major
investments, partly due to uncertainty from the protracted vote
counting from the June general election, Theo said.

He added that economists exhibited a lesser role in promoting
efforts to establish the country's economic stability due to the
enhanced influence of politics.

"Political party leaders have gained a greater influence in
deciding the country's economic stability."

Theo also noted inconsistencies of the International Monetary
Fund (IMF) and other international financial institutions in
judging the country's economic conditions.

"IMF has a vested interest in saying that the economic
condition in Indonesia has recovered. That way they can protect
their money and projects in Indonesia," he said. (udi)