Foreign investors demand business security

JAKARTA (JP): Foreign interest in investing in the country appears to be returning amid signs of an improvement in the economy, but security and political worries remain the biggest concern in realizing their investment plans, according to local businessmen.

Hashim Djojohadikusumo, CEO and chairman of the Tirtamas conglomerate, said on Tuesday that the interest of European investors to invest in the country was gaining momentum.

He pointed out that England's Thames Water utility firm and venture capital firm Commonwealth Development Corporation (CDC) were going ahead with plans to raise their investments in Indonesia.

Thames Water has just secured a total of US$200 million in loans to add more facilities to its water-supply project in Jakarta, he said.

He added that CDC was also making preparations to increase its investment especially in the country's plantation and mining sectors.

"The interest of investors from Switzerland and France is also positive," he told reporters following a shareholders meeting of his publicly listed Bank Papan Sejahtera.

However, he said that the European investors were demanding security and safety to run businesses in the country before executing their investment plans.

"The European investors are very concerned about the security situation," he said.

Hashim is the government's special envoy with a mission to entice European investors to return to the crisis-hit country, which went through bloody political and social rioting in May leading to the downfall of former president Soeharto.

He explained that the foreign investors were very concerned about the recent killings in East Java, and rampant lootings particularly in the plantation sector.

"The government has to be resolute in restoring order and security. Stop talking, start some action," he said.

Businessman Edward Soeryadjaya, the former co-owner of the giant auto manufacturer PT Astra International, agreed that the interest of foreign businesspeople in the country was increasing.

"But they will only start making investments if there is political certainty," he said.

"One measure of political certainty is a transparent and successful general election. This will be very positive," he added.

The country is scheduled to hold a general election either in May or June 1999. Over 90 political parties have so far registered to contest in the election, a marked difference to the past election where only three government-sanctioned political parties, all virtually controlled by Soeharto, were allowed to contest.

"There's hope that investments will start to flow back after the general election," Edward said.

He also said that the government should start lowering the current punitive interest rates in the wake of the considerable strengthening of the rate of the rupiah against the U.S. dollar.

"Under the current high interest rate environment (55 percent to 65 percent) no business can run normally, except those engaged in speculative activities," he said.

The rupiah has appreciated by around 40 percent since late last month, closing at Rp 7,400 to the dollar on Tuesday.

The significant appreciation in the currency is seen as a sign toward a recovery in the economy. (rei)