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Technology Stocks : INDONESIA'S PT TELECOM(TLK) -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (769)	7/10/1998 12:38:00 PM
From: tom	Read Replies (1) \| Respond to of 947

On the Big Mac Index I think Jakarta has the cheapest currency in the world. A packet of 20 Marlboro Lights costs about 20c. I think the prices of most goods have reflected about 50% of the fall in the currency ie they are up 2-3x when they should rise 4-5x. The interesting thing about Indonesia is that they actually import many of their basic goods even though their land is rich in resources. One of the facts working against a rise in prices is the governments actions to subsidize the prices of basic foodstuffs such as rice. At the end of the day that is the governments overriding concern. More than any political or economic concern their main priority is to prevent starvation. It is very difficult to stabilize prices effectively as most of the subsidized rice is exported by corrupt officials. (It is horrific that a combination of greedy international banks and crony capitalism has led to a massive fall in the living standards for 90% of the population. Suharto and his cronies will have much of their money in Switzerland and Singapore. Most of the population do not have this choice.) I'm going to check up on the recent prices of a selection of goods but I think they still have further to rise. The official figues will probably state that inflation is 40-50% but the real figure for this year will be nearer 200%. Luckily (or not, depending on who you are) Indonesia's unions are weak and so a Latin American hyperinflation scenario is unlikely (no indexation of wages) but if the government continue to print money to bail out insolvent banks then they increase the risks of hyperinflation dramatically. Interest rates are high (50%) but not high enough given the inflation outlook. I think the Rupiah is headed to 20,000 and I much prefer the outlook for the Thai Baht and Korean Won given the risk reward profile.