'Marriott blast has limited impact'

'Marriott blast has limited impact'

Dadan Wijaksana, The Jakarta Post, Jakarta

The economic impact of the recent blast at the Marriott Hotel was
expected to be limited to a few sectors, allowing the economy to
remain on track to achieving the growth target of around 4
percent this year, analysts claimed.

The quick recovery of the rupiah and the stock market, both of
which took a hit on the day of the bombing, leaves only the
tourism and travel sectors to suffer a longer term impact,
according to Citibank economist Anton Gunawan.

"Assuming that no similar bombs go off in the future, the
Marriott blast should not cause a devastating economic impact
overall, although tourism will suffer in the next couple of
months," Anton told The Jakarta Post on Sunday.

Not that investor confidence, especially foreign, was not
shaken because of the event, Anton added, but it would be
unlikely to cause a mass exodus.

"The confidence of the existing foreign investors was indeed
affected, but it would only make them cautious, but not to a
degree that can create a capital exodus," he said, adding that
even the more severe bombings in Bali, which caused the death of
200 people, last year did not cause much capital outflow.

He welcomed the planned stimulus package from the government
to help mitigate the bombing's impact, referring to the
government's plans to introduce a set of policies designed to
improve business and investment climate at home.

The package will be officially announced next week when
President Megawati Soekarnoputri unveils the 2004 national
budget.

Last week's bombing attack rocked the prestigious five-star
hotel in one of Jakarta's busiest business districts and has so
far left 11 people dead and some 150 others injured. The rupiah
and stock market stumbled on that day on fears of massive capital
inflows resulting from the shattered confidence.

But, things changed for the better in the following days, with
the local unit and the stock index starting to recover. By
Friday, the rupiah extended its rally for three straight days to
close at Rp 8,590 per dollar.

Likewise, the stock index ended at 505.36 points, also above
the pre-blast closing of 503.94.

Those provide signs that the economic impact would be isolated
and short-lived, with tourism to be the hardest hit.

"The direct longer term impact would be on tourism, which has
just begun to bounce back from the Bali bombings. We won't see
that recovery in the next several months," Sri Adiningsih,
economist with the Gadjah Mada University, told the Post.

When the bombing took place, the hotel was averaging a 77
percent occupancy rate, way above the country's average of 45 to
50 percent, according to tourism-related associations.

Sri said that although she forecasted the economy to grow
slightly below 4 percent this year, it was not because of the
terror attack, but more due to the government's slow progress in
boosting investment and exports.

Despite the limited impact, Sri and Anton cautioned the
government against sitting back, because the investment community
was now waiting for real action to restore security and stability
and deter similar attacks in the future.

Meanwhile, Malaysian textile merchant Ng Chiaw Iang told AFP
that the attack had raised the risk perception among foreign
investors, and that a swift response from the government to
resolve the matter would be the key to restoring that confidence.

"I still have confidence in doing business in Indonesia, but
if there are new attacks, I may have to reconsider my business
plans," he said.

Local businessman Anton Supit, while noting that the economic
impact would be limited, said that the government still had to
improve the investment climate, as even before the bombing, new
foreign investors remained reluctant to invest because of a less
than attractive business environment.