(8 Sep 1999) English/Nat
The already weakened Indonesian economy has taken a severe battering due to the crisis in East Timor.
Economic forecasters warn that investors might be persuaded to withdraw their money from the country and that the region will suffer significantly until any form of stability returns.
The stockmarket in Jakarta was just beginning to show signs of recovery before East Timor plunged into anarchy.
Last year the economy contracted by 14 percent and now relies to a large extent on international financial support.
Another economic meltdown in the world's fourth most-populous nation could unleash further political chaos in Indonesia and undermine the more positive signs of upturn in the past few months.
Justin Urqhart-Stewart of leading stockbrokers Barclays says the situation will dissuade investors from putting their money into Indonesia.
SOUNDBITE: English
"I think we shouldn't underestimate this crisis - it is a very major crisis indeed, because although we focus on East Timor, actually there are lots of other issues going on around the whole of Indonesia, both in Java itself and up in Western Sumatra as well - so with the whole situation in - I wouldn't want to say uproar - but certainly not looking settled, the President not looking strong, then I'm afraid anybody who is looking at the country wondering whether they should invest in it I suspect is having very serious second thoughts."
SUPER CAPTION: Justin Urqhart-Stewart, Corporate Planning Director, Barclays Stockbrokers
Mr Urqhart-Stewart believes the rupiah may fall further - it was down over four percent against the U-S dollar on Tuesday.
This could leave the country being treated as an outcast by the money men.
SOUNDBITE: English
"We've already seen the currency go down very significantly - the question is how much further can it actually go? But we've been through this before and the answer is that it can go quite a bit further unless there's seen to be a stable base to it. The strength to Indonesia frankly is in the oil price and the ability to export oil - so that always will give it some underlying security to it and will also draw money back in - once there's a level of stability there, but I'm afraid for the time being everyone's going to treat it as a bit of a pariah until it settles down."
SUPER CAPTION: Justin Urqhart-Stewart, Corporate Planning Director, Barclays Stockbrokers
It has been the worst of times for Indonesia - just when it seemed a new surge of energy was returning to the market.
SOUNDBITE: English
"This really couldn't have happened at a worse time because just in the past few months we've seen some money going back to South East Asia, particularly of course Thailand and Malaysia, but also we've seen some recovery in Indonesia, and now of course we've lost all of that. We've seen the rupiah fall down, we've seen the stockmarket go down quite significantly - so all that money - all that good work that's been done over the past few months has now been wasted."
SUPER CAPTION: Justin Urqhart-Stewart, Corporate Planning Director, Barclays Stockbrokers
The rupiah has now fallen to its lowest level since April.
Investors and brokers are bracing themselves for worse to come.
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