Indonesians who fled abroad likely to return: Consultant

Indonesians who fled abroad likely to return: Consultant

SINGAPORE (Reuters): The majority of Indonesians who left the
country would most probably return within the next few weeks as
the threat of more riots and destruction recede, an Indonesian
expert said yesterday.

James Castle, chairman of the Indonesian-based Castle Group
which provides business consultancy and research services on
Indonesia, said in an interview the exodus problem was probably
near its end.

"I expect 95 percent of Indonesians citizens to be back within
weeks. The foreigners won't come back as fast primarily because
they will find there won't be the businesses there to support
them," he said.

He said many of those who had fled Indonesia in the past week
won't have the resources to start up businesses elsewhere.

"They may wait a few days to see if this is for real. But it
seems the threat of riots and destruction has gone way down.
There will be a honeymoon period and these people will be eager
to get back to business as soon as possible," he said.

Castle, who has lived in Indonesia for 20 years, expected to
return to Indonesia on Saturday after a business conference in
Singapore on Friday.

Commenting on Indonesian President Soeharto's resignation
yesterday morning, Castle said "it was a far smoother transition
than imaginable so far" as the process accepted the existing
parliament as a valid institution.

Looking forward, he said there were tough challenges for the
new government, including new parliamentary elections probably
within six months. "It will be a major test and I hope it won't
distract economic restructuring."

Castle said top economics minister Ginandjar Kartasasmita was
highly regarded by the International Monetary Fund (IMF) and
World Bank and both "should be happy if he stays on".

"If they leave Ginandjar in place...the IMF will be able to
move forward with confidence because they trust Ginandjar," he
said.

Castle said he expected things to move quickly in certain
areas as Indonesia fulfills more IMF demands faster.

"Certainly, the monopolies will unambigiously be gone. They
would be able to move faster to restructure the banks and bring
in foreign expertise."

Castle said if the new government wanted to go after the
assets of the Soeharto family, it would not be too difficult as
most of the companies owned by the family members have large
loans from the state banks.

"Like everybody else they are having trouble paying back. It
would be very easy for the banks just to seize the collateral and
they can be resold later."

Castle said Soeharto's family control of the economy was
probably not as large as often estimated.

"You can look at the published assets of the 200 biggest
groups in Indonesia -- all the family interests there are about
15 percent of the assets of the 200 biggest groups."

He said the Salim Group alone accounted for over 20 percent of
the assets. Salim is headed by Indonesian Chinese tycoon Liem
Sioe Liong, also closely associated with Suharto.

Castle also said he expected more hardships in store for
Indonesia with the economy shrinking some 10 percent this year.

"That is a huge decline in GDP (gross domestic product) terms.
In the best possible scenario, it will be take at least five to
eight years for the buying power of the average Indonesian to get
back to June 1997 levels," he said.

He also said the best case scenario for the rupiah was to
strengthen to about 7,500 to the U.S. dollar by year end.