Political tension seen as no problem
Political tension seen as no problem
JAKARTA (JP): The warming political situation ahead of the
general election will not have a big impact on foreign businesses
in Indonesia, observers have said.
The director of the Indonesian Netherlands Association, Chris
Smith, said Tuesday most Dutch businesses in Indonesia felt the
current political situation had little effect on their decision-
making.
He said a survey the association conducted last August showed
that only 10 percent of Dutch business leaders were reluctant to
expand their investments after last year's July 27 riots in
Jakarta.
"In other words, 90 percent did not regard the political
position as having any significance for decision-making. It shows
that at that time Dutch businessmen were still very confident
about the business climate here," Smith said on the sidelines of
an association business luncheon.
He said he was confident the situation would continue as
Indonesia's rapidly growing economy became less dependent on
political developments.
Smith disregarded critics who said government inconsistencies
were a hurdle to investment flow.
"Inconsistencies are part of a developing society and I think
the government is also aware of that ... I think the government
is trying hard to adjust to all the needs in the country," he
said.
Smith said it was understandable if business slowed over the
next two months during the election period.
"That's normal and happens everywhere. So, there is still
absolute confidence in the economy," he said.
The chairman of Lippo Group, Mochtar Riady, said recent riots
would not cause panic among large national corporations.
Political violence shook parts of the Central Java towns of
Pekalongan, Rembang and Temanggung last week. Nine people were
reportedly killed in the riots.
The riots involved supporters of the Moslem-oriented United
Development Party and the dominant Golkar -- two of the three
parties contesting next month's elections.
Mochtar said he was convinced the situation would not cause
much capital flight.
"I don't think there is any feeling of panic and it is
unlikely that capital flight will occur," he was quoted by the
Bisnis Indonesia daily as saying.
He said the general election would not affect foreign
investment flows to Indonesia.
"Judging from the flow of foreign investment which has
continued at a high rate, I think this indicates that investors
are very certain of Indonesia's economic fundamentals," he said.
Analysts have said the riots indicated growing political,
social and economic dissatisfaction.
The chairman of the Confederation of Netherlands Industry and
Employers, JC Blankert, who spoke at Tuesday's business luncheon,
said unrest could be also incited by employers' inability to meet
workers wages as happened in every country.
"I think certain rises in wages are always a problem for any
employer, all over the world ... If you don't expect the rise
you don't calculate it in the prices of your products," he said.
He said that in the Netherlands collective labor agreements
were fixed for one to two years, during which no wage rises were
possible.
"We look to inflation and productivity and never pay workers
above those figures because then you get in trouble," he said.
Earlier this month many American businesspeople said
Indonesia's political situation was not only the main factor that
could affect foreign businesses.
They said corruption and policy inconsistencies were also
possible hurdles.
American businesspeople said Indonesia could become one of the
world's biggest economies and a developed country more quickly if
corruption was eliminated.
Last month, the Hong Kong-based Political and Economic Risk
Consultancy Ltd rated Indonesia as Asia's most corrupt country.
(pwn)