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Economic terrorism in
Indonesia
By Tony Sitathan
The recent bomb blasts in Bali have created what
some experts describe as a "terrorism risk premium" not
just to Indonesia but to all of Southeast Asia. Many
economists warn of capital flight and low foreign
investment. And in fact, immediately after the October
12 bomb blast, most of the Asian basket of currencies
dropped by as much as 2-3 percent while the stock
markets took a bad mauling.
"The Jakarta Stock
Exchange index and most blue-chip counters slipped by
almost 35 percent. That sent shock waves throughout the
financial and business community in Indonesia almost
overnight," said Iwan Yoniton, of Bahana Securities a
state-owned securities company.
Although this
sent panic down the spines of local businesses and
foreign companies in Indonesia, many felt that the
after-effect of the Bali bombing was overrated.
"We thought there would be panic selling in the
Jakarta bourse and also most businesses would come to a
standstill, but nothing of that kind happened. Its seems
like it's business as usual in Jakarta," said Freddy
Irawan, an electronics importer based near the Chinatown
district of the Indonesian capital.
Thanks to
the government of President Megawati Sukarnoputri, the
Bank of Indonesia, the central bank, intervened to prop
up the sliding rupiah. "However, it's not sure how long
this can be done, since more than US$20 million has been
dumped in a single day by the central bank continuously
within the first week of the Bali carnage," said Iwan.
The crackdown on terrorism by the Megawati
administration, the promise of closer cooperation with
other Association of Southeast Asian Nations
governments, and the swift arrest of the head of an
Islamic fundamentalist group in Indonesia helped to
prevent a heavy economic fallout in the economy that has
been chugging along slowly since early this year.
More has to be done to reassure local industry
as well as foreign investors who have been warned
against even making trips to Indonesia and other Asian
countries, including Singapore. "With the growing trend
of globalization among nations, it's inadvertent that if
one national economy shows signs of slowing down or is
badly affected, it could negatively influence the rest
of region, and what happened in Indonesia does have a
direct impact on the rest of the Asian economies, with
the exception of India and China, that have a large
enough base to be self-sufficient," said Agus Widjaja, a
professor of economics at Pancasila University and a
principal consultant for a state-owned mining company
based in Kalimantan.
The battering of Indonesia may
not be over yet. According to several reports by the
army's intelligence wing, major cities such as Jakarta,
Bandung, Semarang, Surabaya and Medan have been
classified as Code Blue, where security forces are on a
high state of alert to prevent another major catastrophe
like the one in Bali.
Instead of pointing the
finger and accusing foreign powers, the Indonesian
government or the military for the Bali mishap,
something more concrete has to be done, says Mickey
Effendi, a businessman trading in seafood produce in
Indonesia. "The politicians and those in the military
seem to be engaged in a virtual power struggle in
Indonesia. It's about time something of national
interest [is] done to exonerate the image of Indonesia
to its neighbors and to the outside world," he said.
A realistic anti-terrorism purge is meant to
safeguard the national interests and solidarity of
Indonesia. More effective policing and cooperation among
anti-terrorism task forces of neighboring countries has
to be in place. Nipping terrorist practices in the bud
would improve the image of Indonesia. Security and
political stability is considered one of the
prerequisites for foreign investments, and a nation
without it cannot hope to achieve much.
"Already
the arcane policing laws and differing political
ideologies are causing havoc in the minds of the
investor. What is needed is a tough stand on terrorism
before the next conclusive decision [is] taken to ally
the fears of foreign investors," said Agus Widjaja.
The fear of economic terrorism that serves to
hijack the interests of the business community has to be
addressed squarely. Certainty and continuity of stable
economic policies are necessary for progress. Yet the
general rank and file of the business population in
Indonesia is more concerned with daily issues rather
than issues that concern national interests.
Abdullah Hade is a wholesale supplier who sells
vegetables to vendors in the Cinere night market in
Jakarta. To him what matters most is the ability to sell
his vegetables on time. Even a single day's delay would
affect his turnover. "What I need most is good roads in
place and a sensible trucking system, not something
grandiose," he said.
To Goenawan Sejarir, what
is needed most is less interference from the
authorities. "I run a bakery in the heart of Glodok in
downtown Chinatown. What is most depressing is the
shakedown and the payments one has to pay the
authorities and the police, so that my business can run
smoothly without any interference," he said. He wants
greater transparency among government bodies and an end
to corruption.
While the business community in
major metropolitan cities is aware of the larger threats
to security and political stability, what is more
important sometimes are such daily issues as having
sufficient electricity, housing, and water, and
eliminating corruption and improving infrastructure
development.
If Indonesia can address these
smaller but essential issues, then perhaps it can also
try to include the larger issues on its wish list.
"There has to be a concerted effort by the government to
be able to address these fundamental issues and hence
create a sense of belonging to the general population
and by giving them a stake in Indonesia. That would be
the ultimate challenge for Indonesia and Indonesians,
especially in these times of uncertainty," said Agus
Widjaja.
(©2002 Asia Times Online Co, Ltd. All
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