Jakarta – At least half of the factories in Indonesia face bankruptcy if the country cuts diplomatic ties with the United States, sending millions more workers out of work and disrupting economic recovery program, analysts and business leaders warned.

"It is not right for the United States to attack poor and hunger struck Afghanistan in search for an alleged terrorist, but it is not right either for the Indonesian government to break off diplomatic ties with the United States," Iman Taufik, a chairman of the Indonesian chamber of commerce and industry (Kadin), said Wednesday.

Iman said the suffering of the 220 million Indonesians, who are mostly Muslims will be worse if diplomatic ties with the United States are to be cut off.

He pointed out mere reactions by radical Muslims calling for severance of diplomatic ties already had caused big losses such as to the tourism industry with sharp decline in the number of foreign visitors, falling occupancy rate of hotels and declines in sales of handicraft products. "There will be massive capital flights and the program for economic recovery will be disrupted," he said.

He said Malaysia, which is much stronger economically, is not as vehemently anti-American as Indonesians.

Bustanul Arifin, a director of Indef, an economic think tank, said a call to boycott US products will harm Indonesia more than it will the United States.

Many Indonesian factories could not continue operation as they are heavily dependent on supply of basic materials from the United States, Arifin said. It would be worse still if the United States retaliates by boycotting Indonesian products, he said, adding that at least 50 per cent of Indonesian factories will be almost certain to go bankrupt.

He said the United States is the largest market for Indonesian export commodities. Many textile buyers in the United States have already turned away from Indonesia to other countries such as Taiwan as they no longer have confidence in Indonesia's ability to meet the delivery time.

Labor MInister Jacob Nuwa Wea predicted that at least 3 million more Indonesian workers will lose their jobs if the country breaks off diplomatic ties with the United States.