Bomb Blasts Damage Fragile Indonesian Economy as Asian Markets React

Oct 14, 2002
By Hans Greimel Associated Press Writer

TOKYO (AP) - Southeast Asian markets tumbled Monday as investors across the region reacted to the Bali bombings that killed more than 180 and sparked fears of new terrorism.

In Jakarta, stocks tumbled more than 9 percent, and markets sank in Bangkok, Manila and Kuala Lumpur on investor fears of "Bali Effect" copycat attacks.

The Indonesian rupiah plummeted against the dollar.

Some investors feared more fallout Tuesday, when stock trading resumes in Hong Kong and Tokyo - where many of Southeast Asia's biggest investors list their shares. Both exchanges were closed for holidays Monday.

For Indonesia, one of Asia's most fragile economies, Saturday's bombings undermined its already shaky financial health. By Monday, the effects were already being felt in one of the country's top industries: Tourism.

"This will definitely create a dent in the economy of Indonesia," said Anak Agung Jede Rai, a spokesman for the Bali Tourism Board, who said hundreds of terrified foreign tourists had already fled the island.

Swedish tour group Charteroperator Fritidsresor was among those pulling out. It will cancel reservations for all the 1,000 passengers booked on flights to Bali after the Swedish Foreign Ministry advised people not to go there. In Norway, travel agency Wikstroem Reiser canceled all its charter trips to Bali until Christmas.

Meanwhile, organizers of an upcoming energy conference, the Seventh Annual Condensate Forum, shifted their meeting from Bali to Singapore because of security concerns.

More than 5 million foreigners visited Indonesia in 2001 - about 1.5 million to Bali alone - accounting for about $5 billion in foreign exchange earnings.

Jede Rai said it was too soon to say how much the economy would suffer.

But Bali saw a similar tourist slump after the Sept. 11 attacks in the United States. Officials then forecast Indonesia's tourism industry would lose more than $1 billion from massive cancellations of bookings by Western travel agencies.

The oil industry, Indonesia's other major economic anchor, is also wary. Oil and gas firms throughout the country, a member of the powerful Organization of Petroleum Exporting Countries, were increasing security amid fears their operations could be targeted.

Crude prices for November delivery were up 11 cents to $29.48 a barrel on the Nymex Access market, amid concern supplies could be interrupted.

Even before Saturday's attack, Indonesian officials acknowledged the economy was taking a turn for the worse. Last week, the central bank said it was unlikely to meet a 4 percent economic growth target this year because of slowing consumer demand.

Indonesia's government tried to play down the economic impact of the attack, and pledged Monday to restore foreign investor confidence.

"The government will show its intention to make sure the country isn't a place for terrorism now or ever," Senior Economics Minister Dorodjatun Kuntjoro-Jakti said.

No one has claimed responsibility for the bombings - the worst terrorist attack in Indonesia's history - but suspicion has turned to al-Qaida and an allegedly affiliated group, Jemaah Islamiyah.

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