Transparency 'essential' to restore confidence

JAKARTA (JP): Greater transparency and political will, especially in nominating vice presidential candidates, are essential to restore confidence in the Indonesian economy, chairman of Gemala Group Sofjan Wanandi said yesterday.

After a seminar on Indonesian export prospects in the regional free trade era, Sofjan said the issue of political leadership -- and the smooth transition from one leader to another -- as well as a more open political system -- needed to be addressed in order to restore international confidence.

"For foreign investors, political transparency is more important now than the government's economic policy," he said.

He urged the ruling Golkar to announce its candidate for vice president as soon as possible because the world is waiting to hear who it is.

Sofjan, who was part of a business mission to the United States led by Finance Minister Mar'ie Muhammad last week, said businesspeople overseas asked many questions about the issue of national leadership succession.

He said most foreign businesspeople asked about the country's monopoly and national car policies and about the leadership transition.

"The government needs to provide clear signals and greater transparency, because inconsistencies and mixed signals affect investor confidence in the short-term and more importantly cloud the medium-term outlook of the country's prospects," he said.

Sofjan also said that foreign creditors' confidence in Indonesian companies was on the wane.

He said some foreign creditors had asked private companies to repay debts prior to the maturity date because of their complete lack of confidence in Indonesia.

"If the government cannot restore public confidence in the coming year, I am afraid that most major Indonesian companies will collapse," he said.

He said most major local companies would not survive a continuing fall in the rupiah's value as well as high interest rates.

"But if the adjustment policies are undertaken successfully and the government and businesses use this opportunity to make the necessary self-corrections and recognize that they will be operating in a different environment, I'm confident that in the medium-term the prospects will be bright," he said. (gis)