Soeharto's speech hoped to boost investor interest

JAKARTA (JP): President Soeharto's rosy economic statement should improve investor confidence in the domestic capital market, securities analysts say.

David Chang, Sigma Batara's research director, said that the President's speech reflected the country's healthy economic fundamentals.

"The government will have to further attract fresh foreign investment in order to achieve the higher economic growth projection," Chang told The Jakarta Post on Wednesday when he was asked to comment about the possible impact of the President's plan to revise upward the economic growth projection

Chang said that an expected increase in foreign investment would also strengthen and stabilize the rupiah.

"The government's plan to boost economic growth will make the domestic capital market a healthier alternative for investment," he said.

In his speech to the House of Representatives on the eve of the country's 50th anniversary, the President said that there is a need to revise upward the target the economic growth.

He said that the 6.2 percent growth target set under the sixth five-year development plan, ending in 1999, is too low given the higher than estimated growth in the last five years.

Economic growth

The average economic growth in the previous five-year development plan reached 8.3 percent per annum, while in 1994, the first year of the current sixth five-year development plan, the figure reached 7.3 percent.

The President said based on last year's economic achievement, the 6.2 percent growth target for the sixth five-year development is too low.

Soeharto said that the per capita income target of US$1,020 by 1999 should be revised upward as the per capita income had reached $919 at the end of 1994.

"The low target does not encourage us to work harder, work more productively and efficiently," the President said in his speech.

The President also promised to improve economic policy in order to give fair business opportunities to all the country's economic players.

Analysts at a joint venture securities company said that a government commitment to provide fair business treatment will improve investor confidence.

"Such a commitment is essential to providing a fair business climate for all companies," he said.

"This will in turn give companies the same opportunities to grow and, as a long-term impact, investors will have more blue chip alternatives," he explained.

Low

The President's economic statement, however, failed to stimulate trading activity on the local exchange yesterday as the buying impetus remained low due to the bearish New York Stock Exchange, dealers said.

The Jakarta Stock Exchange (JSX) Composite Index dropped again yesterday, losing four points to close at 510.38, as compared to 515.0 on the previous day.

Dealers and stock securities analysts said that the share price drop over the last three years did not reflect the capital market fundamentals.

"Stock prices did not perform well mainly due to the drop in share prices on Wall Street," a dealer said.(hen)