RI tycoons in China to repatriate $1 billion

Rendi A. Witular, The Jakarta Post, Beijing

In an effort to help ease pressure on the rupiah, Chinese- Indonesian businessmen have agreed to gradually repatriate U.S. dollars that they parked overseas in late 1997 during the Asian financial crisis.

Their willingness to repatriate the funds was conveyed in a closed-door breakfast meeting here on Wednesday between Vice President Jusuf Kalla and state enterprises executives and noted tycoons, who are estimated to control some 50 percent of the country's economy.

Among the attendees were businessmen Sofjan Wanandi, Tomy Winata, Pradjogo Pangestu, Anthoni Salim and Sukanto Tanoto and state enterprises executives, including PT Telkom president Arwin Rashid, Bank Negara Indonesia president Sigit Pramono, Garuda Indonesia president Emirsyah Satar, PT Antam president Dedy Aditya Sumanagara and PT Pertamina president Widya Purnama.

The businessmen and the executives attended the meeting during Kalla's two-day trip to China. The Japanese leg of the VP's trip has been canceled due to the plunging rupiah, which has hit a four-year record low.

"We have agreed to gradually repatriate our foreign exchange but under the condition that the government is willing to create economic certainty in the country," said a noted businessman who refused to be identified.

The businessman said they had demanded the government immediately raise fuel prices to cut the massive cost of the fuel subsidy in order to create a more stable and sustainable economic condition.

The amount to be initially repatriation is estimated at US$1 billion, with the businessmen pledging to pour more dollars into Indonesia if there is a clear indication that the government will raise fuel prices, said another businessman.

The rupiah has nose-dived in past weeks, driven mostly by concerns of higher global oil prices that have affected the country's fiscal stability because of the higher cost of the fuel subsidy.

According to Bloomberg, the rupiah traded at 10,250 against the greenback at Wednesday's closing. It hit a record low of Rp 11,800 to the dollar on Monday.

Meanwhile, oil prices reached US$70.48 a barrel in New York and $68.05 in London for October's delivery due to damages to U.S. oil production facilities caused by Hurricane Katrina.

Chinese-Indonesian businessmen have long been Indonesia's economic backbone even after the 1997/1998 financial crisis. Even though most of the tycoons -- who have close links with the Chinese government and conglomerates -- remitted their money out of the country, most of them are still committed to maintaining their businesses here.

During the meeting, the businessmen also agreed to help the government invite more Chinese to invest in Indonesia to help revive the real sector, which will eventually employ some of the country's vast number of jobless.