U.S. investors to keep close eye on RI polls

U.S. investors to keep close eye on RI polls

By Yenni Djahidin

WASHINGTON (JP): Among foreign groups and individuals planning
to monitor Indonesia's first multiparty elections in June are
American business leaders with interests in Indonesia.

They will not be observing the polls in the way the Carter
Center did in Nigeria and probably will in Indonesia. But they
will be watching it closely because, like many others, they feel
that this will be a crucial turning point for Indonesia to
resolve the current political and economic crisis.

The president of the U.S.-ASEAN Business Council, Ernest Z.
Bower, says most American investors are delaying investing in
Indonesia until after the elections.

But none of the council members is pulling out, he said in an
interview at his office here. "They're trying to survive the
transition."

The council is a nonprofit organization grouping American
companies who have investments in the Association of Southeast
Asian Nations (ASEAN) countries.

Bower visited Indonesia recently with 20 other members of the
council. He talked about his trip in the following interview.

How was your trip to Indonesia?

It was good. I think you get more pessimistic about Indonesia
if you do not go there. Visiting makes you feel that Indonesia is
in a better situation than what you'd learn by just reading
newspapers here.

Everybody, from cab drivers to government officials, have
hopes for their country. This is an historic turning point, so
there is a lot of anxiety. I am pretty optimistic about
Indonesia's future. More optimistic after my visit.

How do you assess the short-term prospects?

Politics are what's on people's minds and that's
understandable given the historic changes coming face to face in
Indonesia. But I found that when you start talking to
businesspeople, there are real economic issues being dealt with
right now. The economy is not completely dead, and it's probably
bottoming out right now. From our perspective, the key for
foreign investors is to stay engaged, support good people, good
employees, good partners, try to keep them alive through this
process and look for opportunities when things pick up again,
which I think will probably happen after the elections.

What is the most serious problem you see in Indonesia?

In a way the problem is the solution, because the problem
right now is the uncertainty caused by the political situation.
The good news is that there are going to be elections and that,
once they take place, then Indonesia takes a step forward and
starts to move through its own process of reforming its
government and, hopefully, that will create an environment
conducive to entrepreneurs and the development of Indonesian
business in the future. That's the hope that American business
has.

One analogy that I use is there are three crises happening all
at once in Indonesia: financial, economic and political. It's
like a forest fire, a lot of things are kind of burning, and
that's sometimes great because new trees come up. What we are
trying to do is figure out what has been burned out and what has
been damaged. Because what we can do is observe this, and see
which will be a strong tree in the next forest in Indonesia.
There are some good people there who hopefully will be able to be
involved in politics and good business partners.

Have you seen those trees, and what are the best business
activities?

I think certainly agribusiness is strong. It's going to be
strong after coming out of this. Rural areas seem better off than
people would have imagined six months ago. Agricultural prices
worldwide are fairly strong and there are some outstanding
Indonesian commodities and agricultural companies that will be
good partners. I point, for example, to the investment of one of
our major food companies, Heinz. It just bought into an
Indonesian ketchup company, ABC Indofood. They bought their spicy
ketchup division. It's an investment of between US$50 million to
$100 million.

American companies will understand the political risks in
Indonesia better probably post-June. You are going to see an
increase in direct foreign investment, except if the elections
don't take place, or if after the elections there is more chaos
and violence, in which case people will hold back.

What is your assessment of the upcoming elections?

From a business standpoint, it's important that they take
place and that the process is open enough so that Indonesians get
the person they want elected, that there is a government which
they can support. That's the key thing. For business, political
stability is the key. To have political stability, you have to
have legitimate elections. If you have elections which are seen
as illegitimate, you're going to have continuing strife.

What is the prospect for American business in Indonesia?

We (just) came away from this mission. We had 14 companies and
probably 20 people, including executives. Mostly companies which
have some involvement in Indonesia already and which are looking
for future investment, or who came along just to try to
understand the environment there. And we wanted to indicate that
we weren't going anywhere. We are part of the transition in
Indonesia because our companies have investments on the ground
there and employ people. You can't afford to stand back and say,
"Let's let Indonesia go through this transition and then we'll go
back in." The point for my council and for my members is we are
there, so we have to be intimately informed about what is
happening in this process because it will effect our business and
our members don't plan to pull out of Indonesia. They're trying
to survive the transition.

And if the elections go well?

You'll see some new investments this year because there are
people sizing up Indonesian companies and partnerships,
distribution channels they'd like to be part of. For American
companies, we think we have a lot to offer at this time in terms
of bringing in partnerships. We've got money, we've got
technology and we have international distribution channels which
Indonesian companies are going to need to start to emerge from
the crisis.

If the elections go well, you'll see the well-informed
companies that have good intelligence on Indonesia, who
understand that the elections went fairly well, and that the
country is going to be moving forward and they'll start to make
investments. But if they don't see political stability, I think
that will stall new investment. I don't think you'll see a large
pullout. But Indonesia is in a very, very competitive
neighborhood. People are watching Thailand, Malaysia, the
Philippines and China. It's an extremely competitive position
that Indonesia is in for foreign direct investment. There are a
lot of reasons to go there, but until political stability comes,
you won't see new flows of investment. I think you'll see the
graph starting to go up this year. It will get better after the
presidential election.

What kind of leader do you want to run Indonesia?

There is a real honest answer to that. We want a leader who
the people will support. If it's somebody who the people of
Indonesia won't support, there's not going to be political
stability and that's bad for business.

We met with most of the front-runners (B.J. Habibie, Amien
Rais, Megawati Soekarnoputri, Gus Dur, Adi Sasono) and asked what
their plans were and what their vision was for Indonesia. We need
to know, if they win, what it would be. There was a common
denominator that is important for us: all of them said there was
a role for foreign investors.

Was there any particular candidate you like the most?

American business is not foolish enough to take preference
over one candidate. Maybe individual people have somebody in
their hearts, but it's really not our elections, not our country.

But it will effect your business.

Right. Everyone we've talked to has supported the sanctity of
contracts that were signed under the previous regime. That's
important for Indonesia's international profile going forward. If
you were seen by foreign investors as breaking contracts, then
you really would go backward in terms of being able to attract
new investments. So, across the board we heard fairly positive
things. No one gave us reason to fear them, nor did a particular
person stand out that we would pick as our favorite.