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Indonesia
Stock Prices Plunge After Hotel Blast
Panic selling sent share
prices in Indonesia lower as investors reacted to a bomb blast in
Jakarta's central business district. At least 10 people died in the
attack and dozens were injured. The attack could cut short the recovery
in Indonesia's tourism industry.
Jakarta composite share index fell about three percent Tuesday
following the explosion outside the J.W. Marriott hotel in the
Indonesian capital. The index closed at 488 points.
The explosion comes just as Indonesia's tourism industry was
beginning to recover from last year's Bali terrorist bombing, which
killed 202 people, most of them foreign tourists. The bombing prompted
many Western governments to advise their citizens to avoid traveling
to Indonesia for fear of more attacks, and the country's tourism
industry shrank as much as 70 percent late last year.
The Marriott is one of the newest luxury hotels in Jakarta and
is popular with foreign business people, as well as tourists.
One analyst said Tuesday's bombing may damage the country's tourism
sector if authorities cannot prevent further attacks.
"We have seen travel pick up on the back of very attractive tour
packages," said Song Seng Wun, an economist with G.K. Goh Securities
in Jakarta. "I don't think over this weekend that will really change
very much unless of course the law and order situation deteriorates
further. That depends on whether this is a one-off [event]."
It is not clear who is responsible for the explosion, which police
say was a car bomb.
The Marriott bombing comes two days before judges are to issue
a verdict in the first trial of a suspect in the Bali attack. Indonesian
authorities say the bombers are members of Jemaah Islamiyah, a
regional Islamic terror group.
Mr. Song says that if Tuesday's blast is tied to the Bali trial,
it could reflect badly on Indonesia's reputation for controlling
terrorist organizations. That could make Indonesian interest rates
rise, as international lenders will become reluctant to lend money
in Indonesia if they think it is unsafe.
"This comes at an inconvenient time," explained the economist, "because
the government of Indonesia is looking to exit from the IMF program
at the end of this year, and they will be looking to borrow quite
a substantial amount of money from the capital markets to pay the
IMF, so it could cost them a tad more this time around."
That also could make it harder for Indonesian companies to pay
their debts or borrow money to expand and hire workers.
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