Govt warned of possible impact of Egyptian crisis

Though no impacts of the Egyptian political crisis have been felt on the country`s economy, businessmen warned the government of possible adverse effects on investment and trade.

Chairman of the Association of Indonesia Businessmen (Apindo) Sofyan Wanandi has reminded the government and businesses of the importance of anticipating the impact of the political tension in Egypt on economy and trade.

"Now the impact may not yet be felt, but certainly later it will because of the uncertainties that would affect oil and gas prices. So we must immediately take anticipatory measures," he said.

The Egyptian crisis --where popular revolt demanded for the ouster of President Hosni Mubarak and prompted many countries to evacuate their citizens, including Indonesia-- has received mixed reactions in the country.

Some state officials said it could cause adverse effects on the country`s economy while others still doubted whether or not it would have impact, despite the fact that there has been price turmoil in the market.

"We see that the turmoil in commodity markets is only temporary because it is caused by the crisis in Egypt and in my mind it would not affect economies in Asian countries," Bambang PS Brodjonegoro, head of the fiscal policy affairs of the Finance Ministry, said here on Wednesday.

Actually, the Egyptian conflict has caused negative sentiments to the Asian stocks as well as to the country`s composite stock index. This has affected the exchange rate of the Indonesian rupiah currency.

"The negative sentiment has put pressures on the Asian stocks which would finally affect the rupiah exchange," market analyst of Batavia Prosperindo Billy Budiman said on Monday.

However, except for European countries which at present are entering the winter season, Bambang said, the Egyptian upheaval would have significant impacts on the Asian economies.

Bambang said the government had made various assumptions in the state budget based on a one-year period so that it would not be reactive to the Egyptian turmoil.

"The assumptions in the state budget are based on an annual basis. (Prices) are high now because it is still in the January - February winter season. Hopefully it will begin to go down in the April - May dry season period," he said.

He said that the crude price assumption of US$80 per barrel was set on the annual basis so that it would be too early to carry out price analysis and price changes. 

"It is too early if we are now reacting to alter the assumptions owing to the fact that the present situation is still a result of the January period. We have to look a little bit far ahead," he said.

At present, crude prices have begun to increase in the world market. However, Indonesian Trade Minister Mari Elka Pangestu couldn`t comment much on the possible impact of the Egyptian crisis on Indonesian trade, despite the fact that crude price had reached US$100 per barrel.

"We`ll wait and see what is going to happen in Egypt. The problem now is the oil price that has reached more than US$100 per barrel," the trade minister said.

According to Chief Economic Minister Hatta Rajasa, the government will watch oil price increases. "Of course we have to pay attention to oil price increases. I don`t think there is a country willing for the price to increase when the world is facing economic difficulties," Hatta Rajasa said.

He said that if the oil prices were too high it would affect and slow down the manufacturing sector, thus at the end it would affect the country`s economy.

"Even oil producing countries are also aware of it," the chief economic minister said.

At least the government at present has not yet seen the impact of political tension in Egypt on its trade with that country.

"Let us for the time being wait and see. We cannot as yet be able to see what would happen with regard to trade and investment. For the time being we cannot as yet see its impact. We hope the problem there could be immediately settled well," trade minister Mari Pangestu said.

Yet, the ongoing political crisis in Egypt is expected not to reach the Suez Canal as it would have a great impact on commercial traffic through the waterway. "I hope the crisis in Egypt does not reach the Suez Canal because it would definitely affect Indonesia`s trade, especially with European countries," Robert J Bintaryo, a spokesman of the Trade Ministry said meanwhile.

Therefore, the Egyptian crisis must be anticipated. According to the chairman of the permanent committee of the Indonesian Chamber of Commerce and Industry (Kadin) for the Middle East and the Organization of Islamic Conference, Fachry Thaib, the impact of the conflict must be anticipated.

"Although the impact on us will be small because the volume of our trade with them is very small, it will be dangerous if it spreads to other countries," he said.

Fachry said right now he had heard no confirmed reports about the declining activities in trade with Egypt or the loss Indonesian businessmen had suffered because of the conflict.

He said the conflict in Egypt would possibly have a real effect on exports of several commodities such as crude palm oil, paper and electronics. (*)  

Source: ANTARA