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Bombing will hit short term

THE recent bombing in Indonesia is unlikely to have a direct long-term impact on business in the region, provided it is an isolated incident, however it may deter new businesses from entering the region.

Western Australian chairman of the Australia-Indonesia Business Council Ross Taylor said the bombing’s short-term impact on business in Indonesia would be immediate, however.

“Essentially in the short term it will regrettably have an impact,” he said.

“One in a loss of investment into Indonesia, such as mining, telecommunications – big capital expenditure – which is an area where it has been in decline anyway.

“Secondly there will be a fairly sharp reduction in ‘new to export’ markets. That is, a sharp deterioration in people wanting to do business and a decline in the number of inquiries and so on. What I do believe is that the seasoned businesses that operate in the region will continue. It will be business as usual.

“In the longer term, it will depend very much on events such as the outcome of the presidential election in 2004.”

State Development Minister Clive Brown said the impact of the recent bombing would have little effect on those already operating in the region or on service-based businesses.

“There are a lot of businesses in Indonesia developing joint venture partnerships and I would doubt that the bombing would have implications for that type of businesses,” he said.

“Certainly you’re looking at a new business [in Indonesia] there may be some reservations in the short term.

“Obviously next year when people are casting their mind forward, once next year’s presidential elections are made they will look at their investments,” he said.

Credit Risk Management general manager of the Export Finance and Insurance Corporation, Slater Smith, said the rating for Indonesia hadn’t changed since the bombing.

“We don’t have any intention of changing our risk rating [for Indonesia] in light of recent events,” he said.

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