Back to basics
special
1
l
WHAT'S News Issue 4 April 1998
i 1
Lucyanna
Pandjaitan of trade
and commodity
finance doing the
Rabo thing
were pushing lines onto
companies. No one ever
thought it could get this bad
this fast. Any banker who says
they predicted this is a
hypocrite.'
CRISIS OF CONFIDENCE
How did things get so bad so
fast? 'I think the basic factor
here is a crisis of confidence
rather than any other single
issue,' says Jakarta's Paul
Beiboer. 'This country has a lot
of resources. What it doesn't
have is capital. Indonesia's
growth was dependent to a
major extent on outside
investment. And everyone
wanted to be in this market.
Great growth rates, a huge
market of 200 million
potential consumers, you just
had to be here.' The price of
being there was to disregard
what Paul calls the dark side of
the country. 'Things that
people, investors, took for
granted before July 1997,
things like corruption,
nepotism, lack of transparency
and disclosure - all the things
that used to be considered
accepted, all of these things are
now a burden. Maybe this is
because in spite of all the
problems, nothing essential has
really changed in the business
environment. And as long as
the crisis of confidence
remains, the problems here
won't go away.'
EARLY WARNING
For the Indonesians, the crisis
of confidence in their
economie miracle is rather like
the aftershock of a devastating
Relationsbip
manager Chaidir
Anwar Sani
For ordinary Indonesians, the initial collapse of the rupiah
was a problem for 'men in suits'. It was a financial crisis on a
level that seemed remote from their real lives. But as the
rupiah plummeted against the dollar, losing some 80
percent of its value within months, the realities of economie
crisis began hitting people hard.
Years of consistent strong more ambitious, especially for
growth and increasing their children. It's hard to
prosperity had given people a imagine yourself becoming
sense of certainty. Their violent, one international
aspirations had grown, become Rabobanker in Jakarta said.
we did was put in place even
more stringent controls. It
made more paper work for our
people here. But we feit it was
essential.'
POLITIC AL WILL
This early warning doesn't
mean we'11 escape the
problems facing this huge
country. The bank is never
political - it certainly cannot
afford to be partisan or to
intervene in the internal
business of a host country. But
we're indirectly involved in the
fortunes - economie, social
and political - of all the
countries in which we operate.
In the early days of the region's
crisis, wrote The Economist's
leader in late February, the
nouns used to describe the
crisis were dramatic - 'turmoil,
collapse. The adjectives,
however, were more
reassuring: economie,
financial.' The reassurance
apparently lies in the fact that
'economies recover, financial
markets revive, often quite
quickly.' This appears to be
true for some of the countries
that initially surfaced as
hardest hit by events of last
summer - Thailand, especially.
But, says The Ficonomist, the
new adjective for Southeast
Asia, and particularly for
Indonesia, is 'political'. If the
crisis of confidence is to be
overcome, then political will is
needed, if only to ensure that
milk again becomes a staple
rather than a luxury.
earth quake in which the
infrastructure remained
standing, but the internals
have been shaken beyond all
recognition. The denial that is
beginning to fade in other
countries like Thailand lasted
longer here. No one ever said
the rupiah was overvalued,
Jeroen Nijssen handling risk
management
even when it was plummeting
against the dollar. 'We started
at 2,450,' says Jeroen Nijssen
who handles risk management,
'when it hit 3,500 everyone
was saying: this is unreal, it
will have to stabilize soon. In
fact, even when it was falling
steadily, people were so
convinced it was no more than
a hiccup, that people were
actually selling dollars for
rupiahs. Yes, you heard that
right.' Rabobank Duta was
actually quite fortunate in that
a number of clients got into
difficulties as early as
September. 'That was an early
warning,' says Jeroen. 'What
