RI joins APEC meeting to shore up confidence

The Jakarta Post, Jakarta

President Megawati Soekarnoputri has left for the Asia Pacific Economic Cooperation (APEC) summit in Mexico, where she is to confront international skepticism on the Indonesia economy since the Oct. 12 terrorist strike in Bali.

The government hopes to counter doubts with an explanation on its handling of the Bali bombing, according to Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti.

"The government hopes to gain international support and assistance for policies and actions that have been undertaken in the aftermath of the tragedy," Dorodjatun said in a statement on Monday.

He did not say what President Megawati planned to say to convince countries to keep Indonesia on their investment radars.

Poor security has long been a problem in Indonesia but the bomb explosion on Oct. 12 has deepened concerns with terrorists now seen as operating in this country.

At least one international insurance committee has increased the risk premium for ships bound to or leaving Indonesian ports, while economists warned security jitters would stall investment spending.

The APEC annual meeting in Los Cabos also comes amid worries of a possible war against Iraq and the Bali bombing renewing fear of terrorism.

Indeed, analysts have said the focus of the meeting would likely deviate from APEC's main goal of freeing trade barriers around the Asia Pacific region to discussing terrorism.

Noting the economic havoc terrorist strikes could wield, they said, the U.S. would possibly use the APEC meeting to garner more support for its global antiterror campaign.

Against this backdrop, Indonesia might come under new pressure to crack down on suspected terrorists here in view of the fact that the government had long been downplaying the terror threat.

The massive bomb explosion that killed nearly 200 people in Bali, however, marks a turning point for Indonesia. So far the government's response to the tragedy has drawn positive comments from other countries even though its moves risk a backlash at home.

The government has issued two antiterrorist decrees to clamp down on suspected terrorists while waiting for an antiterror law to be drafted.

Last week's arrest of Abu Bakar Ba'asyir won praise from Singapore. Ba'asyir is said to have founded Jemaah Islamiyah (JI), an organization banned in Singapore and Malaysia but against which Indonesia has done little until now.

Economists said the government must act against such threats if it wanted business confidence to return.

"It depends on how the government reacts after Bali," said economist Marie Pangestu of the Centre for International and Strategic Studies (CSIS).

She warned that domestic consumption, the backbone of Indonesia's economic growth, was faltering and that the country needed to offset the weakening consumption with more investment and exports.

"Consumption growth is slowing, we can't expect much from investment, and while we still have export, it can be affected if security is weak," she said.

Prior to leaving for Mexico, Dorodjatun said in Bali the government might allocate about Rp 9 trillion (about US$978 million) in unused loans for small and medium size enterprises to help Bali's recovery.

"We still have Rp 9 trillion and we only have two months, November and December, to go. Of course we can use the money to help tourism in Bali to recover," he said in a meeting in Bali with the representatives of the country's tourism sector.