Govt hopeful riot wont's hit investment

JAKARTA (JP): The government remained confident yesterday that last weekend's riots would not adversely affect the country's investment climate, but businessmen seem jittery.

After reporting to President Soeharto, Minister of Investment Sanyoto Sastrowardoyo told journalists that the impact of the riots would be contained and should not scare investors.

"We hope the impact will be rather negligible because things like this occur everywhere. In the United States, Japan, South Korea...," Sanyoto said when asked about the possible impact of the riots on investment.

Meanwhile, prices on the Jakarta Stock Exchange edged up 0.4 percent yesterday amid quiet trading dominated by domestic investors. The rupiah remained volatile within a very narrow margin, ranging from Rp 2,348 to Rp 2,350.

Sanyoto acknowledged that a country's political stability was a key factor in investment decisions. He assured reporters that Indonesia would remain stable.

"What is important is that the (security) officers have taken firm measures to restore order so that everything is under control now," Sanyoto said.

Jakarta was rocked by the worst riots in two decades on Saturday. Thousands of demonstrators burned buildings and cars after the disputing factions of the Indonesian Democratic Party (PDI) fought each other at the party's headquarters.

"It is an internal PDI problem," Sanyoto said. "The current developments are not relevant to investment and I hope they will not affect direct investment."

The most telling damage of the riots on investor confidence was the drop on the Jakarta Stock Exchange. It fell 3.2 percent on Monday and edged down another 1.3 percent on Tuesday, in what analysts said could herald a long-term loss of confidence in the country's stability.

"In the market, people look at the prevailing conditions. When they believe the conditions, the market will reflect their confidence," Minister of Industry and Trade Tunky Ariwibowo told journalists after attending a business luncheon here yesterday.

Tunky stressed that the government would contain the impact of the riots and would continue its deregulatory measures to create a more conducive business climate.

"This is only temporary, and I believe it will soon recover," Tunky said.

Meanwhile businessman and legislator A.A. Baramuli said yesterday that the business community was still nervous following the riots, and warned that it would be detrimental to the business environment if the jittery mood prevailed.

"The government should not let this atmosphere continue. The government must solve it quickly by involving all the disputing parties," Baramuli said.

Soedarpo Sastrosatomo, the president of the Samudera Indonesia Group, also expressed concern over the impact of the riots on Indonesia's economy.

"We've already lost a lot due to the riots. I hope it will not happen again as it will hurt our economy... We'll be left far behind by our neighboring countries if the riots are protracted," he warned, citing the Philippines after the fall of President Marcos.

Enggartiasto Lukita, former chairman of the Indonesian Real Estate Association and a commissioner of PT Bangun Cipta Pratama, shared Soedarpo's concern that the riots should not recur.

"The one-day riot alone (last Saturday) made a big impact on our economy. Can you imagine how much capital flight has been caused by the upheaval? It will certainly deal us a heavy blow if it continues," he told The Jakarta Post after attending a graduation ceremony of the Institute for Management Education and Development's School of Management here yesterday.

He cited the share price drop on the Jakarta Stock Exchange and the depreciation of the rupiah against foreign currencies following the riots.

"We have not been able to quantify the economic impact of the riots. But for a comparison, look at the Medan riots ( North Sumatra) in April 1994. I was told that the capital flight immediately following the riots reached about US$200 million," he said, warning that businessmen, especially Chinese businessmen, could easily leave the country.

"We have to bear in mind that it is the general public who will suffer the most from such rioting. The businessmen can easily go abroad as they have money," he said.

He said he agreed with the opinion that there was economic disparity in the country. But confrontation would not settle the problem. "We need dialogs," he said. (13/rid)

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