Habibie appeals for help from Germany

JAKARTA (JP): President B.J. Habibie called on Germany, a country he has had a 19-year affiliation with, to help Indonesia weather the 18-month economic crisis through intensified investment and trade.

Speaking on Monday at the opening of the week-long technology exhibition Technogerma, Habibie assured 300 German business figures that Indonesia's market would continue to be receptive to German products.

"We expect, especially in our current condition, that Germany will help Indonesia, by absorbing more of our products and by intensifying investment here," he told participants.

Up to 1997, Indonesia experienced about US$1 billion in trade deficits with Germany yearly, he said.

Last year the trade deficit was slightly lower, because the rupiah's collapse against the U.S. dollar weakened Indonesia's import capacity, he said.

Separately, German Economy and Technology Minister Werner Muller said on Monday that Indonesia suffered 600 million Deutschemark (US$352.94 million) in trade deficits in 1998, after exports rose 3 percent to DM3.6 billion and imports from Germany dropped 33 percent to DM3 billion.

Habibie said Germany provided a crucial role as a "bridge" for Indonesian exports entering European Union markets.

German investment in Indonesia is currently 3.7 percent of total foreign investment. Out of 59 countries, Germany is Indonesia's 10th largest investor.

Most German companies here invested in electronic, manufacturing, machinery and components, container, food processing, plastic, pharmaceutical, glass, and aluminum industries, Habibie said.

In 1998, German-approved investment in Indonesia dropped to $71 million on 28 projects from $4.47 billion on 15 projects in the previous year, he said.

Habibie also said the International Monetary Fund expected Indonesia's economy to grow by 3.4 percent this year, compared to a Fund estimate of a 15.3 percent contraction last year.

The economy had made progress on several fronts, including a stable rupiah, which currently hovers around Rp 8,700 to the U.S. dollar, after sinking as low as Rp 17,000 to the dollar last year, he said.

Earlier, official estimated gross domestic products this year would grow by 1.5 to 2 percent, compared to a 13.68 percent contraction in 1998.

Habibie said the crisis had dragged down the per-capita income of Indonesia to $400 last year from $1,055 in 1997.

The inflation rate in 1998 reached 77.63 percent, while the poverty level climbed to 40 percent, he said.

With the industrial productivity level reaching only 62.4 percent of total capacity, the number of unemployed totaled 15.4 million last year, he added.

Meanwhile, Muller emphasized Germany's confidence in Indonesia because of the latter's economic potential.

He said Germany would help Indonesia restore its damaged image in the global business community.

"In an economic crisis there is always a psychological factor; we'd like to show people that something positive is going on here to restore the damage caused by psychological effects," he said.

"Indonesia is going through a positive process of reform and democratization," he added.

Technogerma, which ends on Sunday, is the second German technology fair held in Indonesia since 1979.

Participating in the event are 194 large and medium German companies, which work in the mechanical and electrical engineering, chemicals, transportation, environmental technology, medical technology and service industries.

Major participants include auto giant DaimlerChrysler, air carrier Lufthansa, widely-diversified Siemens and power company Asea Brown Boveri Aktiengesellschaft.

Muller said that the exhibition could be a stepping stone for cooperation between German and Indonesian medium-sized businesses, because they constituted 70 percent of the fair's participants.

"In Germany, medium-sized means competition, innovation and flexibility. These three factors are crucial for Indonesia's recovery," he said. (das)