Investment path, rupiah show 'promising trend'

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)