Foreign investors 'too pessimistic on Indonesia'

JAKARTA (JP): European and American investors have taken a too pessimistic view on Indonesia's economic recovery and might find themselves missing investment opportunities here if they continue to shy away from this country, according to a French economist on Monday.

Economist and former European Commissioner in charge of economic, monetary and financial affairs Yves-Thibault de Silguy said that foreign investor pessimism prevailed despite "good signals" of economic recovery in the country.

"The attitude of European and U.S. investors is not as good as it should be. Their attitude is too pessimistic," he told reporters at a press briefing.

De Silguy, the vice president of the Suez des Eaux Group, is visiting Indonesia to affirm the company's investment commitment in the country. He was also actively involved during the 1999 launching of Europe's single currency, the Euro.

At the press briefing, he highlighted Indonesia's strong consumption growth as of importance to investors.

He said the speed of Indonesia's recovery was encouraging, but not enough to impress investors in Europe and the United States.

With a population of some 210 million people, he said, Indonesia's main strength was its market size. "The main strength of the country is the market, because the market drives the economy, and the larger the market the greater the opportunities to develop," he explained.

De Silguy said that the time had come to invest in Indonesia, warning European and U.S investors that more aggressive investors were already seizing the opportunity.

"If conditions become better and better it will be more difficult to enter Indonesia," he went on.

However, De Silguy admitted that Indonesia was facing many constraints in its recovery.

"Not all problems are solved... nothing is perfect," he said.

He said that favorable economic indicators was not enough to lure back foreign investors.

"The question of foreign investors is always a question of confidence," he explained.

He cited the present political instability, and economic and legal uncertainties as among the factors that made it difficult to restore investor confidence.

But, according to him, the government has acquired a better sense of assessing its political and economic situation.

"There is always progress to be made," he said.

Striking a similar note was the chairman of Deutsche Bank AG in Asia, who blamed political and legal uncertainties for investor disinterest in Indonesia.

"Even though there have been improvements in the economic field, what is lacking is the investor confidence," the former director of the International Monetary Fund for Asia and the Pacific, was quoted as saying by Antara after meeting President Abdurrahman Wahid at the presidential palace.

De Silguy said his company was committed to raising its investment in Indonesia, which at present stood at US$60 million.

Through its subsidiary PT Pam Lyonnaise Jaya (Palyja), the company provides water services to about 210,000 customers living in the western part of Jakarta.

Under plans to provide drinking water to its customers by 2010, Palyja would invest another $140 million over the next 10 years, he explained.(bkm)