People's economy concept worries U.S. investors

JAKARTA (JP): The populist economic approach adopted by the President B.J. Habibie administration has U.S. investors worried.

The president of the American Chamber of Commerce in Indonesia (Amcham Indonesia), James W Castle, said here on Wednesday that many American businesspeople feared that Indonesia's people- oriented economy could turn into a socialist economy.

"Many reports on the government's economic policy have created fear among foreign businesses," he said. "The thing they most fear is that if the policy turns out to be a socialist economy, the granting of resources is merely a task rather than an effort to promote a competitive market," he said at a business luncheon hosted by the chamber.

Minister of Cooperatives and Small Enterprises Adi Sasono, a staunch promoter of Indonesia's people's economy, however, said that such fears were groundless.

In a speech at the luncheon he said that many people had the wrong perception about the government's increased attention on the development of small and medium-scale businesses.

Speaking to reporters after the lunch, Castle said that if the government turned the economic policy's direction to socialism, it would mean there would be no respect for private property.

"Businesspeople fear that there will be a lack of respect for private properties," he added.

He said socialism had failed in many countries, and if it came about in Indonesia, American investors would have reason to fear.

"So American investors want clarification of minister Adi's programs, especially on those related to the people's economy concept and empowering small and medium enterprises and cooperatives".

Castle said that many European countries adopted an economic system similar to a socialist economy, but those countries respected private property and had a good judicial system, in which all legal disputes could be solved.

"There is concern over the judicial system in Indonesia," he said.

Adi said the people's economic concept adopted by the Indonesian government had nothing to do with socialism.

"A people-oriented economy is very different from a socialist economy. We will not protect small businesses by creating barriers for big businesses entering the market.

"The government will instead try to create a balance where small enterprises grow rapidly and big companies continue to do business as usual," he said.

A balanced situation will only emerge if the rules of the game are upheld and opportunities are available for all, especially small and medium enterprises and cooperatives.

He said large business groups had the wrong perception about the people's economy and they feared that the concept would mean the government could transfer their assets to small businesses.

"There are misperceptions by some people that the government will take over the assets of troubled conglomerates and distribute them among small businesses. Our program has nothing to do with that at all, it is all a misunderstanding," he said.

Adi's people-oriented economic concept has received mixed reactions both from domestic and foreign observers. Concerns have been raised that the policy could involve the forced redistribution of assets belonging to large, troubled companies and banks to small businesses.

Castle said that basically, American investors did not have a problem with the implementation of a people's economy in Indonesia.

"As a matter of fact, the United States is the best example of how the people's economy works," he said.

"The explanation given by minister Adi is very encouraging, and I think we 99 percent agree on what he said. I hope American businesspeople have a clearer view after hearing his explanation," he added.

Castle said that mining and natural resource-based businesses remained attractive to American investors amid Indonesia's prolonged economic crisis, but many investors preferred to wait and see due to uncertainties in the country's political and social climate. (gis)