Foreign investors demand business security
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)