Louise Williams, Jakarta – Indonesia's ruling Golkar Party has announced that the controversial Technology Minister, Dr Jusuf Habibie, is its vice-presidential choice, a move which is certain to further undermine international business confidence, as rural rioting continues and the rupiah weakens.

The chairman of Golkar and Parliamentary Speaker, Harmoko, announced he would withdraw his name as a vice-presidential candidate "in the national interest", leaving only Dr Habibie as the ruling party's choice in the presidential and vice-presidential elections next month. Indonesia's two most senior posts are decided by the largely hand-picked Parliament and President Soeharto is expected to be elected unopposed for a seventh five-year term when Parliament convenes between March 1 and 11.

His vice-president traditionally has been decided behind the scenes and President Soeharto's personal choice is then rubber stamped by the 1,000 members of Parliament.

When rumours first circulated that Dr Habibie would become vice-president, money markets dumped the rupiah, forcing the currency to its lowest level of 17,000 to the US dollar.

There have been concerns over his record for supporting wasteful state industries and ambitious high tech projects in a nation struggling with poverty, food riots and ballooning unemployment.

The rupiah plunged from 8,600 to the US dollar yesterday morning to 10,700, when trading began, following riots at the weekend which left five people dead and at least 15 seriously injured when troops opened fire on mobs in three towns.

International investors have been looking for positive signs that economic reforms in Indonesia will be implemented to overcome the deep economic crisis which has triggered food riots across Java and the outer islands.

Police said rioting continued in several West Java townships overnight where scores of shops were destroyed. Buses were cancelled in parts of Central Java after mobs stoned passing vehicles.