Indonesia needs 2 to 4 years to recover

JAKARTA (JP): Indonesia will need two to four years to recover from the economic crisis, compared to other Asian crisis-hit countries which will require two years to rebound, an economist at Standard Chartered Bank said on Monday.

However, Indonesia will remain attractive to long-term investors due to its strategic geopolitical position and large market, said Wong Yit Fan, Standard Chartered Bank's chief economist in Southeast Asia.

During the recovery period, the rupiah will not slide lower than Rp 12,000 against the US dollar, Yit Fan said.

"This is based on the fact that foreign investors are in the process of adjusting to changes in the business climate in Indonesia," he said at a forum held by the Priority Banking Division of Standard Chartered Bank's Jakarta branch.

The rupiah currently trades between 8,500 and 9,000 against the dollar.

Yit Fan compared Indonesia's current situation to the situation in Thailand when it was hit by economic and political crises in 1997. Few companies left the country, and many companies which stayed faced uncertainties but were able to deal with the crises, he said.

Nevertheless, Southeast Asia will not return to precrisis conditions when high growth rates propelled economies in the region, he said.

"The crisis should have opened new opportunities to formulate positive economic policies which will attract foreign investment -- as an example, Thailand has seen increased investment since the crisis occurred." (rid)