Paradise losses.

AuthorCooper, Tim
PositionAccountants in Indonesia

It's got paddy fields, tropical sunshine, sandy beaches running down to the Indian Ocean -- and corruption, civil unrest, an appalling human rights record and an economy in crisis. Tim Cooper asks whether doing business in Indonesia is a fascinating challenge or just a nightmare

On 13 September a bomb exploded at the Jakarta Stock Exchange killing at least 10 people and severely wounding many others. The explosion happened the day before a hearing in the trial of former President Suharto, although Major-General Nurfaizi, the Jakarta police chief, would not speculate about political motives behind the bombing. But the apparent inability of the police to investigate this crime or to identify any of the culprits has led to speculation about the former dictator's continued hold over the power structures in Indonesia.

Immediately after news of the explosion the rupiah plummeted to its lowest level in weeks. It ended the day at Rp8.800 -- 250 points lower than it had begun -- while the Jakarta Stock Index dropped to its lowest level this year at 442.091. Rizal Ramli, the Indonesian minister for economics, and John Dodsworth, country manager for the International Monetary Fund (IMF), agreed that the bombings would have a negative impact on the Indonesian economy, but said the effects would be temporary.

The trouble, however, did not stop there. The same week as the explosion, three humanitarian workers were killed in Atambua, West Timor, when thousands of militiamen retaliated against the murder of their leader, Olivio Moruk, by attacking the United Nations High Commission for Refugees. The three UN workers were reportedly forced outside their offices, beaten and stabbed to death and their bodies were burnt in front of the office.

The World Bank and the US have warned Indonesia that it faces a loss of international support unless it brings the pro-Jakarta militiamen responsible for the attack under control. And it desperately needs this support -- not least in the form of IMF loans -- because the country has not recovered from the economic crisis which hit Asia in 1997-98.

International aid donors have agreed to give the country $4.8 billion over the next year to help rebuild its economy, despite continuing political and corruption problems and ongoing violence in West Timor. A report from the World Bank on 13 October said that, although Indonesia's economy was showing signs of recovery "factors such as political uncertainty, regional unrest and...

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