Soeharto says financial services will be protected

JAKARTA (JP): President Soeharto stressed yesterday that the government will not open financial services in the country too much to foreign investors, even though many of them want to enter the country.

"Bapak President said if we open the financial services too much, we will lose because we are not strong enough (in the sector)," Bank Bukopin president Muchtar Mandala told journalists after reporting to Soeharto about preparations for the two-day Asia-Europe Business Meeting which starts tomorrow in Paris.

Muchtar is among Indonesia's six-member delegation for the meeting, which is a follow-up of the Asia-Europe summit held in Bangkok earlier this year. The other delegates include A.R. Ramly, Bustanil Arifin, Hashim Djojohadikusumo and Iman Taufik, as well as economist Dorodjatun Kuntjoro-Jakti, who is functioning as an advisor to the delegation.

Muchtar said many foreign investors in financial services have expressed their interest in expanding their business in Indonesia but could not do so because of a number of limitations set by the government.

The government has so far licensed 10 foreign banks to operate in the country. Four come from Europe, two are from the Netherlands, one is from Germany and one is from Britain.

"France, Belgium and the others stress that they have none of their banks operating here. They said: 'if you want us to invest more here, please allow us to open our banks and our insurance firms to support our investment here'," Muchtar said.

He noted that the opening of foreign banks will be alright. However, Indonesia has its own interest in protecting its banking industry because the country, with some 240 banks, has been considered to be over-banking.

In addition, Muchtar said, Indonesia does not want to offer something which is contradictory to its commitments to some groupings in which it is a member, including the Association of Southeast Asian Nations and the Asia-Pacific Economic Cooperation (APEC) forum.

Meanwhile, Dorodjatun said that unlike APEC, the Asia-Europe Meeting can take binding decisions, considering that it groups sovereign nations, 20 from Europe and 10 from Asia, seven ASEAN countries, plus China, South Korea and Japan.

ASEAN groups Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

"There is a hastiness on the part of Europe. They want to move quickly, especially in the financial sector... If they talk about investment, they always want to corner us," Dorodjatun said.

He quoted Soeharto as saying that to build a better understanding between Europe and Asia, developed countries in Europe should take into account the development level of some member countries in ASEAN.

Bustanil noted that European countries are pressing Indonesia over the financial services because they feel they are suffering deficits in goods trade with Indonesia. In fact, he added, Indonesia still suffers deficits in its trade with European countries.

Meanwhile, Ramly and Taufik said they would try to talk to European countries about their increasingly protective market for products from Indonesia.

Ramly said many consumer products from Indonesia face difficulties in entering European countries because the latter introduce new measures, including dumping and social and environmental clauses, to bar those products from entering their markets.

"We will try to solve these kinds of problems in our meeting with them. We want our products to enter Europe more easily than now," Ramly said. (rid)