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Strategies & Market Trends : Asia Forum
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To: Worswick who wrote (2200)2/16/1998 12:47:00 PM
From: tom  Read Replies (3) of 9980
 
I hate to admit it but I tend to agree with Jim Rogers when it comes to Indonesia (His quote when asked about Indonesia as an investment location "Indonesia won't even be a country in five years time"). Indo's most immediate problems are:

- Huge foreign debt which the country cannot possibly service let alone repay (hence the debt moratorium) ie. the country is bankrupt
- Banks are not lending domestically so the economy has essentially stopped for the last 6 months. Even exporters cannot get credit for working capital ie there is no liquidity to keep the bankrupt companies afloat.
- Suharto is, to put it mildly, unpopular and has no idea of how to deal with the crisis even if a way out existed. People in Indonesia are concerned at his attitude to the country (ie he thinks he owns it and therefore can take what he likes from it)
- No de-regulation of cartels owned by Suharto's friends has happened so far. The IMF know this and there is the risk that they will pull out as Indo has done practically nothing that the IMF asked it to do.
- Massive unemployment looming as companies are forced to lay off workers
- The riots will get much worse - just wait until the unemployment starts to bite and people come to the cities looking for work that doesn't exist
- Hyperinflation is likely if a currency peg is not introduced
- El Nino has not helped and would be a bear story in itself if all the other stuff had not happened.

Can you think of any more?
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