Investment path, rupiah show 'promising trend'

JAKARTA (JP): Investors are optimistic that the rupiah would strengthen and the country's investment climate would improve after the annual meeting of People's Consultative Assembly (MPR) in August, according to Sofyan Wanandi, the chairman of the National Business Development Council (DPUN).

Sofyan, who is also the chairman of the Gemala business group, said investors, who had been perturbed over the conflict among the country's political elites over the past several months, were more encouraged by recent political events indicating a political cooldown among politicians.

He said investors now believed that the MPR would not impeach President Abdurrahman Wahid in its August meeting.

The rivalries pitting the President, who is familiarly referred to as Gus Dur, against the legislators, including MPR Speaker Amin Rais, had created a fear of impeachment during the August MPR meeting.

Sofyan added investors were also encouraged by the fact that the government and the central bank, which were on uncomfortable terms with each other following the detention of the bank's governor Sjahril Sabirin, had started to improve their relationship and make coordinated efforts to support the rupiah last week.

Sjahril is being detained by the Attorney General's Office on charges of involvement in the Bank Bali scandal.

"There are positive signs right now," Sofyan told The Jakarta Post.

"I believe the rupiah will not further weaken ahead of the MPR annual meeting and it might return to the 7,000 and 8,000 levels after the meeting if the President replaces his cabinet, especially his economic team, with more capable people," Sofyan said.

The rupiah ended on a weaker note at Rp 9.330 against the dollar as opposed to Rp 9.315 on Monday. This is much lower than the government's target of Rp 7,000 in the current April-December 2000 fiscal year.

Protest

Sofyan added that investors were also encouraged by the recent actions taken by the government to protect their operations from troubles caused by criminals and protesting workers and villagers.

He said new investors had been discouraged from entering the country and many investors could not maintain operations following a rise in criminal activities, including near-anarchic protests by workers and villagers.

He cited the demonstration staged by about 60 workers of coal mining company PT Kaltim Prima Coal (KPC) in Sangatta, East Kalimantan which forced the company to stop operations and declare force majeure on its contracts with buyers.

KPC, which is equally owned by Anglo-Australian mining giant Rio Tinto and Anglo-American energy firm BP Amoco, has resumed operations after the workers ended their strike on Saturday.

Sofyan said many plantation owners and shrimp farming companies across the country were facing problems with locals, who plunder their produce; and electronics manufacturers around Jakarta have often complained about robbery during the transportation of their products to the ports.

Sofyan said the DPUN had repeatedly called on the government to take action to solve the problems.

"The DPUN has persistently urged the government to support the police and military in taking tough action against the troublemakers. Don't let human rights issues prevent them from taking action. Otherwise, the investors will pack their belongings and go away," Sofyan said.

According to Sofyan, the DPUN regularly holds Monday morning meetings. It then submits the results of the meeting to the government during the Cabinet economic team's meeting on Monday afternoons.

Sofyan said the government had started responding to the investors' complaints.

For instance, the police have launched operations to bust thieves during the transportation of electronics, Sofyan said.

Sofyan lauded the recent decision by the Central Committee for Labor Dispute Settlement (P4P) allowing PT Sony Electronic Indonesia to dismiss 928 employees, who have been involved in a protracted strike since April 26, 2000.

"The government sometimes needs to administer shock therapy to discourage workers from holding illegal or unruly strikes," he said.

Sony's workers protested against the company's new working rule that obliges them to stand, rather than sit, during work.

Sony has said it will fire the striking workers but will pay its financial obligations to them prior to their dismissal in accordance with the law.

Analysts considered P4P brave for favoring Sony in its dispute with workers in light of the stronger power gained by workers amid the current freedom of speech.

Sofyan noted that worker's demonstrations had dropped over the past several months following closer cooperation between the government, employees and employers.

He said worker's demonstrations had dropped 80 percent outside Java, between 30 percent and 40 percent in Central and East Java and 15 percent in Jakarta and its surrounding areas.

"Worker demonstrations in Jakarta and its surrounding areas are rather difficult to settle because they are mostly politicized," Sofyan said.

During the interview, Sofyan also denied allegations that he had supplied information to Gus Dur revealing the alleged involvement of several legislators in the unrest in some parts of the country, including in Maluku.

Gus Dur earlier accused some legislators of being involved in the unrest, including providing financial support for troublemakers in the conflict areas.

Some legislators and Islamic activists accused Sofyan of revealing the alleged involvement of the legislators during a cabinet meeting attended by DPUN.

Sofyan denied this, saying Gus Dur's accusation might be based on intelligence reports. (jsk)