Indonesia Evacuees Watch, Wait in Singapore

From his listening post here, attorney Gary Kotara monitored today’s National Awakening Day rallies in Indonesia closely, hoping for some sign that the violence that has cost that beleaguered nation 500 lives and half a billion dollars is coming to an end.

Many of Kotara’s clients watched with him, having been hastily evacuated over the weekend from Jakarta, Indonesia’s capital city, after the shooting by police of six students sparked several days of violent protests, rioting and looting.

He jokingly calls them the “airplane people,” flown into Singapore on chartered jets, living out of suitcases and operating out of makeshift offices in borrowed space.

Singapore’s swankiest hotels have become temporary homes for thousands of expatriates and wealthy Indonesians--many of them ethnic Chinese whose businesses have been a target of attacks by frustrated and impoverished rioters back home.

Atlantic Richfield Co., Unocal Corp. and Citibank are among the U.S. firms that hastily evacuated their foreign workers and families to Singapore when anti-government protests turned the streets of Jakarta into a battlefield.

“They are doing some strategizing, just trying to figure out how long this will last,” said Kotara, a partner in the Singapore office of Vinson & Elkins, a large Houston-based law firm specializing in the energy business. “Will it be a week, a month, or even a year?”

There was both optimism and skepticism over Indonesian President Suharto’s announcement that he would end his 32-year rule once he has set the stage for elections to select his successor. Foreign executives expressed hope that Suharto’s pledge would avert a bloody “Tiananmen Square-style” confrontation in the streets of Jakarta.

Concern spread far beyond Indonesia. Malaysia and Singapore already faced a significant migration of Indonesians attempting to enter their countries illegally to find work. Japan, whose banks are saddled with an estimated $715 billion in bad or high-risk loans back home, are owed an additional $23 billion by bankrupt Indonesian firms.

Regional stock and currency markets have been extremely jittery in recent days as investors braced for more bad news. On Tuesday, the Indonesian rupiah fell to as low as 14,000 to the dollar before closing just above 12,000. That compares with 9,200 just a few weeks ago.

However, stocks rose 6.4% on the Jakarta exchange, though trading was thin.

The Singapore dollar and Malaysian ringgit also strengthened slightly after losing ground in recent days, resurrecting bad memories of the currency contagion that started last July in Thailand and rattled markets from Bangkok to London.

“I think there’s been a large negative impact in terms of confidence in the whole region,” said Andy Tan, general manager of MMS, a Standard & Poor’s subsidiary here that provides financial analysis.

However markets respond to the Suharto developments, last week’s violent protests have already set back Indonesia’s economic recovery. The toll from the recent riots--which destroyed at least 5,000 buildings, 2,000 vehicles and 313 bank branches--is $515 million and climbing, according to the Indonesian government.

“This has dealt a heavy blow to business confidence,” said Bruce Gale, an analyst in the Singapore office of Political and Economic Risk Consultancy Ltd.

Even if Suharto puts forward a transition plan that satisfies his critics, Indonesia has already lost some of its wealthiest executives, at least temporarily. And not just the expatriate variety.

Since Indonesia’s economy began its downward spiral last summer, businesses owned by ethnic Chinese--who make up less than 4% of the population but reportedly control an estimated 70% of the nation’s private wealth--have become targets of attack. Many of them have quietly fled with their money and their families to safe havens such as Hong Kong and Singapore.

Gale said the Indonesian government will have trouble jump-starting the economy without the Indonesian Chinese, whose sphere of influence includes some of the country’s most important transportation and distribution operations. Disruptions could translate into food shortages and surging prices across this huge country, whose 17,000 islands cover a distance further than Los Angeles to New York.

As Indonesia slides deeper into recession, with forecasts of at least a 5% contraction in economic growth this year, the pressures have increased for the International Monetary Fund to renegotiate the terms of its $43-billion support package for the fourth time.