Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Zeev Hed who wrote (1102)	1/18/1998 7:29:00 PM
From: Rational	Read Replies (1) \| Respond to of 9980

Zeev, The Indonesian situation is very different from Korea's. Indonesia has US$40 bil assets of which US$20 bil is in Treasury and cash. The govt loans (mostly long-term and medium-term) account about US$60 bil. Indonesia is thus in a very strong position. The Indonesian govt stopped defending Rp because they did not want to deplete their reserves and a short-term depreciation in Rp was not an immediate concern. Unlike Korea, Indonesia has ample exportable natural resources and is a net-exporter of oil and natural gas (it is a member of the OPEC), agricultural products like palm oil, paper and pulp. After the currency run in November 1997, Indonesia simply abandoned the IMF plan -- they did not formally announce, though, about an abandonment. US, Germany, Japan, Australia (among others) made frantic calls to Indonesia because (IMO) the latter was in a much stronger position than (say) Korea. While the importance of Indonesia went up, a highly corrupt Suharto also gained importance, unfortunately. US and other countries have no choice (but to kowtow Suharto) because a political change cannot be foisted upon the Indonesian people. At least, the IMF imposed on Suharto to change some of his corrupt habits; there is no guarantee, though, that Suharto will abide by the IMF plan; I feel he will simply to survive politically. The problem in Indonesia is more political than economical, IMO. But, I believe that when the dust settles, Rp will rise at least 100% from its current value, which would still be a 50% discount from the July 1997 value. Sankar