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)