Firms quit Jakarta as panic spreads
Saturday 16 May 1998
Total, the French oil group, was among the Western companies which activated evacuation plans. Total has hired a charter plane to evacuate the families of its expatriate personnel - commercial flights out of the country are fully booked.
Many US firms have begun to move staff out, including BankAmerica and American Express. Nokia, the Finnish telecom company, said most of its employees had already left Jakarta, whilst Ericsson, the Swedish telecom company, said it was flying out 100 of its 500 Indonesian employees.
Most businesses were closed in Jakarta. General Motors, British Aerospace, BP, Toshiba and Mitshubishi were among the multi-nationals which have temporarily suspended operations. A General Motors spokesman said he had "no idea" when its Jakarta-based assembly plant and two parts plants would reopen.
Banks were closed at the behest of the Indonesian central bank, which also suspended foreign exchange dealing.
On the international markets, the Indonesian rupiah rose, as brokers said the cost of "shorting the currency" - betting that it would fall - was rising. Meanwhile, on Jakarta stock exchange, only a handful of shares changed hands.
Stock markets the world over were jittery as fears resurfaced of knock- on effects on Western corporate earnings.
London's blue-chip FTSE 100 share index closed down 30.7 at 5917.8, off its earlier lows of 5866.5, and the US Dow Jones index was marginally lower at midday.
Market reaction in the Far East was relatively subdued with the Japanese Nikkei down 64.83 points at 15,242.86 and the Hang Seng down 53.6 at 9538.4. However, City traders are braced for further losses in the region. "Traders are worried they will be coming in on Monday to significant falls across Asia," commented one dealer.
The Indonesian crisis has re-awakened market concerns about the stability of the Japanese banks. According to the Bank of International Settlements, Japanese banks are the biggest lenders to Indonesia. At the end of June last year, the banks had a combined exposure of $23.14bn (pounds 13.7bn).
The international financial community also expressed concern about the delay to settlements caused by the unexpected closure of the Indonesian financial markets. "We're hoping the settlements will be made on Monday, but there's no way of being sure," said one source.
UK companies were generally taking a more conservative approach to the crisis than their US counterparts. Standard Chartered, the banking group, said its offices were closed, but there were no immediate plans to evacuate. HSBC took a similar stance, and British Aerospace said, although its offices were closed, there were no immediate plans to move staff out.
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