[Fwd: [nike-international] Foreign Investors Express Concerns]

Colleagues,
Bruce London and I published an article on  the political sociology of
FDI a while back.  It was almost unique in explaining the destination of
FDI as distinct from the consequences.  Now comes our first advert in
the form of external validation.  From JP Morgan.  Don't you just love
it when these things happen?
Bob Ross
-------- Original Message --------
Subject: [nike-international] Foreign Investors Express Concerns
Date: Wed, 27 Oct 1999 10:54:46 -0400
From: "Jeffrey D. Ballinger" <jeffreyd@mindspring.com>
To: nike-international@sydney.caa.org.au


excerpt:  "Democracy is a desirable form of government, but it's not
necessarily the 
most efficient form of government," said Ron Leven, a J.P. Morgan
currency 
strategist in Singapore. 





>The New York Times
>October 27, 1999
>
>Foreign Investors Express Concerns About Indonesia´s New President
>
>By WAYNE ARNOLD
>
>AKARTA, Indonesia -- This country's new government is getting a skeptical 
>reception from a constituency that does not vote but could play a 
>determining 
>role in the future -- foreign investors. 
>
>The bankers, brokers and fund managers whom Indonesia's government must 
>court 
>to help pull the country out of its worst economic crisis in a generation 
>expressed some doubts Tuesday whether the newly chosen president, 
>Abdurrahman 
>Wahid, and his 35 ministers have the expertise and cohesion needed to 
>become 
>efficient crisis managers. 
>
>Worse, they fear that the government, in its attempt to use unfamiliar 
>democratic institutions to eradicate the corruption of its predecessor, 
>may 
>sacrifice economics in the name of popular justice. 
>
>"Democracy is a desirable form of government, but it's not necessarily the 
>most efficient form of government," said Ron Leven, a J.P. Morgan currency 
>strategist in Singapore. 
>
>Pervading such concern is a sense that despite encouraging moves toward 
>stability and accountability, Indonesia's political process is hard to 
>decipher and unpredictable. 
>
>"We're only certain about one thing: the economy's a mess," said William 
>Belchere, head of fixed-income research and strategy at Merrill Lynch. 
>
>With its banks and largest corporations still immobilized by delinquent 
>debts, Indonesia remains dependent on emergency financing from the 
>International Monetary Fund and the World Bank. But that help has been 
>suspended until a banking scandal, which helped undermine the previous 
>administration, is resolved. The scandal has virtually paralyzed the 
>agency 
>responsible for reworking those loans and resuscitating banks. 
>
>Despite appeals by the new president that Indonesia needs foreign 
>investors, 
>many foreign financial specialists here seem dismayed that Wahid, a frail 
>Muslim cleric, emerged as the country's leader. Noting the violent 
>protests 
>of the last 15 months, investors had concluded that the only combination 
>likely to put Indonesia on stable ground was for Megawati Sukarnoputri, 
>whose 
>party won the greatest share of votes in June's Parliament elections, to 
>be 
>chosen president and the former defense minister and armed forces chief, 
>General Wiranto, to be named vice president. 
>
>Some of these financial specialists said they were encouraged by Wahid's 
>speech over the weekend, in which he said that "foreign investment" 
>remained 
>the two most important words for the economy. 
>
>They also noted that the value of the Indonesian currency, the rupiah, 
>which 
>is often seen as a barometer of investor sentiment, had risen against the 
>dollar for much of the last month. Even so, caution prevailed. 
>
>"I was impressed by Gus Dur's speech," said Hugh Young, managing director 
>of 
>Aberdeen Asset Management, referring to Wahid by the nickname commonly 
>used 
>here. "But a speech is one thing." 
>
>Foremost among concerns is how quickly the government can satisfy demands 
>by 
>the IMF that those responsible for the banking scandal be brought to 
>justice. 
>The fund and other lenders have suspended a $43 billion aid package until 
>the 
>scandal, in which funds designated for bank restructuring were diverted to 
>a 
>company affiliated with Habibie's political party, is resolved. 
>Indonesia's 
>new parliament has given two commissions the task of deciding whether to 
>meet 
>the IMF's demand that an audit of the scandal naming those involved be 
>made 
>public. 
>
>Investors are also waiting to see how resolution of the scandal affects 
>the 
>Indonesian Bank Restructuring Agency. Officials at the agency approved the 
>deal in question, and some political analysts predict that they and the 
>agency's chairman, Glenn Yusuf, will be replaced. 
>
>Doubts also surround Wahid's choice of economics minister, Kwik Kian Gie, 
>a 
>top aide to Ms. Megawati, who has in the past suggested that Indonesia 
>adopt 
>policies opposed by the IMF, including a change that would lock 
>Indonesia's 
>currency into a constant value against the dollar. Kwik said Tuesday that 
>Indonesia would not adopt such a change. 
>
>
>
>

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