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Jakarta officials 'are parking wealth abroad'

Source
Straits Times - June 29, 1998

Jakarta – Government officials and entrepreneurs involved in corruption, collusion and nepotism are parking their money overseas, a newspaper here has reported.

The Merdeka, in a report last week, said the capital flight phenomenon was no longer dominated by citizens of Chinese descent. It cited a banking observer, Mr Thomas Suyatno, as saying that those with money, particularly government officials, were now as a group taking out their deposits from banks in Indonesia. After changing their currency into US dollars, they were putting the money in banks abroad. "That means they are engaging in capital flight," he said.

The newspaper said Mr Suyatno, who is also the Rector of Atmajaya University, had declined to identify the officials involved. A source in Hongkong estimated that, in recent weeks, funds amounting to about US$20 billion (S$32.6 billion), had been sent out. Part of this money was kept in Singapore, Hongkong and Taiwan, the report said.

During the first few months of the economic crisis, there were rumours that there was about US$100 billion in Indonesian funds parked abroad. Markets Post, a Hongkong publication, had reported that the capital flight was due to the uncertain situation in Jakarta.

This was especially so after the government showed that it was going to exercise tight control to prevent capital flight. "However, these rumours are hard to believe," said the publication.

Bank Indonesia Governor Sjaril Sabirin had not too long ago clarified that the central bank would continue to apply the free money exchange regime. This was because Indonesia's previous experience with controls over foreign-exchange transactions showed that these had proved ineffective. "If one wants to take capital abroad, there are actually many ways of doing it, for example, through import-export trade. There's a lot of ingenuity here," he was quoted as saying.

According to Mr Suyanto, government officials were parking their savings overseas mainly because of the mounting demands by students, as well as the public, for investigations into their wealth. "Because they are concerned about the safety of their wealth, these officials are taking measures which in fact cause harm to Indonesia," he said.

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