Investment in Indonesia offers ripe pickings

Investment in Indonesia offers ripe pickings

JAKARTA (JP): Foreign investors should pounce on prime
investment opportunities in the country because now is the best
time to buy, a leading business consultant has said.

Harvey Goldstein, chief executive of business development
consultancy Harvest International, conceded risks were greater at
present but argued they were worth taking because of rewards from
reduced costs and prices.

With enforcement of the planned bankruptcy law, he said there
would be more companies forced to sell their assets at large
discount prices.

But Goldstein stressed time was of the essence.

"If foreign investors wait until everything is stable, they
will lose the opportunity to other foreign investors."

In an interview Monday, he said foreign investors represented
by executives based in Asian cities such as Singapore, Hong Kong
or Jakarta used the risk-reward relationship in a more positive
way here than their superiors in global headquarters who were
more likely to be alarmed by events in the country.

"What you have now is a sort of conflict that is going on
between expatriates in the field that say: 'look this is a good
time to look at Indonesia' and the guy back home who says:
'Indonesia, you're crazy! Indonesia is very unstable politically,
economically'."

The American said the situation was confusing and frightening
to foreign investors who were recent arrivals or entered the
country in the early 1980s, when former president Soeharto's
family started to build its business empire.

"Indeed the risks have gone up greatly because those people
that have been playing the game under Bimantara, Humpuss, or
Citra model are now looking for a new model to play," he said,
referring to several business groups owned by Soeharto's
children.

But longtime investors of more than 30 years' standing would
recognize the current situation was a throwback to the 1970s when
businesses were under the model of distribution of power, he
said.

"And the new model which applies now is redistribution of
power."

Foreign investors should not bide their time waiting for a
complete settlement of problems because the government has
already displayed its commitment to foreign investment, Goldstein
said.

It has not nationalized any private company and does not
tolerate arbitrary breaks of contracts by its agencies or state
firms.

Although he praised the government's move to let state firms
review contracts which were allegedly made unfairly, he warned
that undue, emotional breaks of contracts could scare foreign
investors away.

Honoring contracts is one of the requirements to attract
foreign investors, he said, along with protection of their
physical well-being and assets.

Goldstein said Indonesia had proven itself to be a good
country for investment because as a multinational player it
assumed responsibilities in terms of honoring contracts, foreign
debt obligations and protecting foreign interests here.

"I think the government is doing an excellent job because the
government over the past 30 years has truly been involved in
global economic dealing.

"The government is very sophisticated, very sensible and very
responsible for the contracts."

The direction of the new government is also clear -- toward
democratization and redistribution of power -- both of which are
welcomed by foreign investors, he said.

"The administration may be transitional, but the process of
democratization and the fact that we are not returning to a
strongman head of state with such a nepotistic background, that's
enough."

He recommended the government should adhere to its consistency
and provide a more conducive climate for investment because these
were the only ways to draw foreign investors.

As the government could not convince foreign investors to
reenter Indonesia through words alone, it should do it through
actions of providing more incentives and certainty.

He also called on large multinational corporations who have
strong operations in Indonesia -- the "anchor investors" -- to do
more in presenting a balanced view of the country to the outside.

"Those who can speak to businessmen are only businessmen from
the same kampong. That's the only way that we are believable.

"Let the Japanese tell the Japanese, let American tell
American, let Taiwanese tell Taiwanese, let French tell French,
let German tell German."

He urged his compatriots in particular to seize opportunities,
especially in the natural resource-based industries which are the
standouts of Indonesian business.

"This is the time for Americans to even up the score with the
Japanese. The Japanese have dominated for so long here. But now
the Japanese are weaker, the dollar is king, let Americans come
in and invest." (rid)