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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (694)	1/11/1998 7:57:00 PM
From: Stitch	Respond to of 9980

To All; FWIW Megawati Sukarnoputri officially launched her candidacy for President of Indonesia and specifically asked Suharto to step down. "Thirty-two years of a Suharto presidency is enough" she said in her surprising declaration in a country where deference to authorities, especially the President, is a way of life. She is the daughter of founding father Sukarno, and addressed several remarks to the economic crisis including a demand that international aid not be used to compensate for losses by speculators and "should not be injected into an economy managed by a government which is driven by corruption, nepotism, and a lack of transparency and democracy". She denounced official greed which she likened to an epidemic and she condemned foreign investors who seek Indonesian partners on the basis of their political connections. This announcement is quite interesting for several reasons. Its extremely critical comments aimed at Suharto are literally unheard of in Indonesia until recently. Further the announcement comes a day prior to the arrival a high level delegation from the USA and IMF officials. Some commentators have dismissed the announcement as an interesting side show because to achieve success in Indonesia a candidate virtually has to have the support of the military which Megawati clearly does not. There has been a growing rumble of anti Suharto rumblings and some signs of a growing hositility between indigenous Indon people and the Chinese who own a large per-centage of the industrial base in Indonesia. Stitch

To: Stitch who wrote (694)	1/18/1998 3:03:00 PM
From: Rational	Respond to of 9980

Hi Stitch: I am very late to get to your message. I just made a post on Indonesia as to what I see could/should be done by parties (Japanese/Korean/German banks) who expect to lose their loans to Indonesian corporations. The real problem (as I visualize) can be illustrated as follows: * A Singapore bank (SB) lends US$3 to an Indonesian corporation and immediately shorts Rp7500 in July 1997 at the exchange rate of Rp 2500 per US$. * When the Rp plummets to Rp7500/US$, the SB covers his short using 1 US$; posting a profit of 2 US$ plus the interest on the loan of US$ 3 minus the interest on Rp. * The SB looks very smart on paper and its stock value balloons. * The negative sentiment about the socio-political situation in Indonesia (with constant rumors spread by short-sellers) make Rp fall on thin trade. Unfortunately, however, the SB is not likely to get back US$3 from the Indonesian corporation. This is why the stock prices in HK and Singapore (especially of banking companies) have fallen more rapidly than expected; all their loans to SE Asia have gone bust due to a crisis they participated in creating by heavily short-selling the SE Asian currencies. This is now a prisoners' dilemma. These banks will have to do the reverse process (by buying SE Asian currencies) and take losses. Indonesia has taken a very smart stand to not guarantee or assume the corporate debt. Sankar