Govt Should Not Wait to See Positive Economic Momentum Lose

JAKARTA, KOMPAS.com - Businesses in Indonesia are waiting for an elegant solution for Century's case. If the presses on certain figures, such as Vice President Boediono and Finance Minister Sri Mulyani Indrawati, then the capital market might be affected, according to economy observer from the Institute for Development of Economics and Finance Indonesia, Fadil Hasan, Jakarta, Wednesday.

Fadil stated that the capital market's condition currently isn't much affected by the heated plenary or the chaos outside the House of Rep. building. Rupiah's exchange value also seems stable.

"I don't see any significant effect. But, businessmen are still waiting whether the case will be settled reasonably and respectably, and therefore acceptable for everyone."

On the other side, chairman of the Employers Association of Indonesia, Sofjan Wanandi, cautioned against the spread of chaos. The government must be firm because investors are on wait-and-see regarding safety.

"If the government doesn't take the responsibility for the case immediately, then the people's power can be frightening. My foreign business associates have already asked whether the case will cause a reshuffle in the government. Some have asked regarding the current political instability."

Chief researcher for Alfa Securities, Pardomuan Sihombing, stated that for the last few days, or even the last few months, Century's case has had quite an effect on the Indonesian capital market. The case has raised the concern of investors for social and political stability in the country.

As the Century case heats up, Pardomuan continued, investors will usually opt to wait. This attitude will usually deflate the transaction values of the stocks at the Indonesian Stock Exchange.

Yesterday, the Composite Stock Price Index weakened by 9.5 points, or 0.37 percent, into 2,567. The LQ-45 Index declined by 1.7 point, or 0.35 percent, into 500.04. The index for Kompas100 declined by 2.3 points, or 0.37 percent, into 616. At the trade kick-off, the stock price index at the Indonesian Stock Exchance had strenghtened, following the upward index from Tuesday. But after the second session, the index slowly declined until trade is closed.

According to Pardomuan, the investors are worried in case the House moves toward suggesting a reshuffle on state officials. The market's concern has risen because the political coalition has shattered due to the option chosen during plenary.

Previously, economy and capital market observer, Ferry Latuhihin, stated that the prolonged process on Century Bank's case has increased the risk of investing in Indonesia. The Bloomberg news agency has notched up its risk rate for Indonesia from 24.5 to 28.

This increase on risk, Ferry believes, will escalate the reluctance of global investors to invest in Indonesia, whether in finance or real sectors. The chairman of the Association of National Banks in Indonesia, Sigit Pramono, stated that throughout 2009 all businessmen, including bankers, tend to opt the wait-and-see attitude as to Indonesia's political issues. But if this matter gets into the ongoing one, Indonesia risks losing positive momentum to boost the post-crisis economic growth. (OSA/REI/C17-09)