Word: indonesia
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...immediate fallout will not help her cause. Prior to the attack, the country's economy was growing modestly. Analysts now are cutting their forecasts. Chatib Basri sliced his 2003 GDP forecast from 4.4% to 3.7%. (The World Bank estimates that Indonesia needs at least 6% growth to create enough jobs for its burgeoning workforce.) Daniel Lian, an economist at investment house Morgan Stanley, says economic revival throughout Southeast Asia could be jeopardized if investors shun the region. As a result, he says, "Economies would be further marginalized and geopolitical risks raised in a vicious cycle...
...business community in Indonesia has had to deal with random violence in the past?two years ago, a bomb exploded in the building housing the Jakarta Stock Exchange, killing 15. But the Bali blast has dragged Indonesia into the war on terror. Foreign businessmen "knew Indonesia was unsafe, but they still came," says Harun Hajadi, managing director of property developer Ciputra Group. "After this one, I don't know if they will come. Maybe they won't want to deal with Indonesians anymore...
...greater worry than tourism is the long-term damage that could be done to Indonesia's flagging economic competitiveness. The country depends heavily on foreign investment to develop infrastructure, build and run factories, extract oil and gas, and create jobs. But due to the perception that Indonesia is a hostile environment for business, foreign direct investment (FDI) has already plunged from its pre-crisis level of $6.2 billion in 1996. Investors seeking low-cost operations are avoiding the country; most are relocating their factories to China. Last year, Indonesia registered a net FDI outflow of $5.9 billion, making...
...Money still gets pumped into oil and gas?Indonesia's largest export industry?but there are considerable operational risks. In August, Caltex Pacific Indonesia, a subsidiary of ChevronTexaco, was forced to turn over management of an oil field in Sumatra to a joint venture between a local government and Pertamina, the country's big domestic producer. Caltex ran the field for 30 years, but when its production contract expired, the company was unable to get a standard extension. Under Suharto, Jakarta controlled the country's natural resource industries. But now, power is devolving to the provinces and local politicians want...
...Social unrest, militant unions, wrongheaded economic policy and rapacious local businessmen out to gain by hook or by crook contribute to what global investors call "political risk." It's something Indonesia has in spades. In June, in an apparent power struggle with its former Indonesian partner, a local unit of Canadian insurer Manulife Financial Corp. was declared bankrupt by a domestic court despite the fact that the operation was solvent and profitable. The inexplicable decision, made because Manulife didn't pay a dividend to shareholders in 1999, was later overturned, but not before the case received international publicity. Partly...