Indian companies in Indonesia packing their bags.
JPR and everyone:
Source:Indian Express-for private use only.
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Jakarta strife may force Indian firms to pack bags for nowÿ
Sabrinath M & Arijit De ÿ
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MUMBAI, May 19: Disruption stares in the face of Indian business houses with bases in strife-torn Indonesia. Expatriate managers are headed home, supply chains are cut off and corporate offices are shut as students gun for president Suharto in the streets of Jakarta, the Indonesian capital.
The AV Birla group, the Essar group, the SP Lohia-led Indo Rama group and the Wadia-owned Bombay Dyeing are all troubled, along with the thousands of non-resident Indian-owned small and medium enterprises, mostly involved in exports.
With Suharto promising a general election soon, but refusing to step down, the end to nightmare of bottomline busts is not yet in sight for Indian investors in Indonesia.
Kumarmangalam Birla's message has gone out to the Rs 15,000-crore AV Birla group companies' registered and corporate offices at Jalan Haji Agus Salim in Jakarta: clear out if you wish to. He has instructed his executives to return to the country, should they sense danger owing to the on-going students-led turmoil (AirIndia rescue flights have started taking off from Monday night).
The group has three textile firms in Indonesia: PT Elegant Textile Industry, PT Indo-Bharat Rayon and Indo-Liberty Textiles. The three manufacturing units are, however, deep in the interior, says a group spokesperson, and therefore their operations "have not yet been disrupted".
The Essar group, which has a cold-rolling mill in Indonesia -- PT Essar Dhananjaya -- has said it has already evacuated the wives and children of its personnel. A spokesperson of the group said operations of the company have not been disrupted as the unit is far-flung.
Bombay Dyeing, which has a 50:50 joint venture with the Indonesia-based NRI Melwani family, called PT Five Star, is believed to be assessing the crisis' impact. The joint venture has its manufacturing facility in Bandung, 180 km away from Jakarta. The company is presided over by DS Alva, the Bombay Dyeing managing director.
As of today, the plant is running at full capacity but the movement ofgoods is getting delayed and the workers are scared about attending duty. If Suharto is not ready for a compromise, the violence will spread to Indonesia's interiors, which might lead to a temporary closure of the plant's operations, sources close to Bombay Dyeing said.
The SP Lohia-owned PT Indo Rama, which has a sizable presence in Indonesia, closed down its corporate office in Jakarta two days back. It is believed to have decided to evacuate its top executives. However, its plants, located at Purwakarta, 100 km off Jakarta, are working at a full capacity.
The LN Mittal-owned Ispat group has one of the world's fastest-running wire mills in Indonesia. This is where ML Mittal, LN Mittal's father, had first began his operations abroad, and in 1976 the 6,00,000-tonne per annum PT Ispat Indo, based in Taman, Siolarj in Surabaya, was the first Ispat plant to be set up abroad. Although violence has not spread to this region so far, the group managers must be keeping their fingers crossed.
There will be nolight at the end of the tunnel for corporates, if the media reports appearing in leading foreign business dailies are any indication.
The Wall Street Journal reported on Tuesday that the crisis in Indonesia threatens to re-open economic wounds across Asia just as they were starting to heal. The rupiah has touched a low of 13,800 to the dollar on Tuesday.
SBI, BoI operations hit
Operations of the representative offices of State Bank of India, Bank of India and Indian Bankin Jakarta have come to a standstill.
"The offices have not been functioning in the last two to three days there," BoI and SBI officials said. Jakarta has asked all foreigners to stay out for now. However, no official has come back.
"We are following a wait-and-watch policy and, if necessary, we will operate from Singapore," said a BoI official. "I do not think the situation warrants us to close shop," he said.
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