S'pore investors have cold feet over RI

S'pore investors have cold feet over RI

SINGAPORE (AP): For decades, Singapore's executives looked out
of their sleek office towers and saw opportunity in the islands
of Indonesia, happily investing in the sprawling and impoverished
archipelago.

But when Indonesia's once-booming economy collapsed three
years ago in the Asian economic crisis, conservative Singaporeans
in the tiny, but wealthy, free enterprise powerhouse began
reducing investment in the world's fourth most populous nation.

Investors' fears were amplified by unrest in the nation.
Soeharto, who ruled Indonesia for 32 years, was forced out by
mass riots in May 1998.

It was only last year that the country held its first
democratic general election in four decades, a change in
leadership that prompted Singapore Prime Minister Goh Chok Tong
to call on his country to lead the way in bringing investment
back to Indonesia.

During a visit to Jakarta in January, Goh said he wanted
Singaporean government-linked companies to buy $500 million worth
of minority stakes in dozens of bankrupt companies. Their planned
sale by the Indonesian Bank Restructuring Agency is regarded as
central to economic recovery efforts ordered by the International
Monetary Fund.

Goh also said Singapore would lend money to private
Singaporean companies seeking to invest in Indonesia. The
government has said it would make $235 million available.

In 1996, the total value of approved Singaporean investment in
Indonesia was $11.5 billion, according to Standard and Chartered
Bank. Last year, Singaporeans applied to invest $731 million in
Indonesia.

Analysts say Goh's support for Indonesia's new government
headed by Indonesian President Abdurrahman Wahid isn't enough in
itself to calm nervous private investors.

The Indonesian president, more popularly called Gus Dur at
home, has promised far-reaching reforms, including a crackdown on
corruption. He has also traveled the world trying to drum up
investment. Still, investors in Singapore - one of Indonesia's
closest neighbors - have been reluctant.

Indonesia remains plagued by unrest. After East Timorese voted
overwhelmingly for independence in an Aug. 30 UN-sponsored
ballot, Indonesia withdrew from the half-island territory.

But after the announcement of the vote, militia gangs, backed
by the Indonesian military, went on a violent rampage, murdering
hundreds of people and destroying most of the territory's
buildings and other infrastructure.

Since then, other separatists on the Indonesian island of
Sumatra have rallied for independence. And only days after Goh's
January visit to Jakarta, villagers, upset by a land dispute and
armed with spears and machetes, overran Singaporean-owned tourist
resorts and factories on Indonesia's Bintan Island, just 40
kilometers (25 miles) east of Singapore.

"The reform process so far has been aimed at crisis
management. Investors will want to see more," said Andrew Fung,
treasury economist at Standard and Chartered Bank in Singapore.

Fung said investors welcome an overhaul of the court system, a
notorious haven for corruption, and other institutions. But they
remain concerned about political instability and social unrest,
he said.

"The political situation in Indonesia, although greatly
improved with a legitimate president, still remains complicated,"
said Lee Kuan Yew, Singapore's patriarch and former prime
minister.

Even so, Lee says Singapore must help. "It is in the interests
of regional stability that Indonesia restores its political
balance and stability," Lee said.