Subject: RT: Indonesia's instablity up
Date: Mon, 28 Sep 1998 12:23:13 -0400
From: "John M. Miller" <>

Indonesia political status highly unstable-PERC 06:58 a.m. Sep 28, 1998 Eastern

SINGAPORE, Sept 28 (Reuters) - Indonesia's risk profile has increased slightly in view of political instability and speculation it would follow Malaysia in imposing capital controls, the Political & Economic Risk Consultancy (PERC) said.

PERC said in its September country report on Indonesia that it had increased Indonesia's risk rating to 7.38 points in September from 7.18 points in August, on a scale of zero to 10 with zero representing the best posible situation and 10 the worst.

PERC said Indonesia's political situation remained highly unstable, with a weak government moving only reluctantly in the direction of economic and political reform.

It said there were also increasing signs demonstrators were heading for a major confrontation with President BJ Habibie in November, when parliament was due to meet to discuss arrangements for fresh elections next year.

PERC said continued reports of scattered looting and spontaneous demonstrations were evidence of widespread social discontent.

It said Malaysia's move to impose capital controls had complicated life for Indonesian monetary officials by triggering speculation Indonesia might be about to try the same thing, or at least re-introduce a currency band system.

Moves against former President Suharto and his cronies appeared to be gathering steam, PERC said.

It said further that promises of broad-ranging autonomy for East Timor had helped improve Habibie's reputation, but also risked opening up a Pandora's box that could ultimately threaten the unity of the state.

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