what's happening? , page-15

Hi BB,

thanks for posting re your Melbourne experience.
re Indonesia.
"I asked about the risks of doing business there and they said they were adopting stringent controls. No work progresses unless all contracts are signed. Any sign of corruption and he said they would walk away. (They don?t really have any cash to grease palms with, that was my little thought bubble.)"



In Indonesia there is national and government movement away from greased palms since it has become a platform for SBY and other political candidates at all levels. If greased palms are found or known, old or new, it is actually a huge liability as the locals will force their governors to screw the greasers for the locals benefit, new developments also have same local interest pressure and interest, otherwise the governor is out next chance. Every region is run by a Governor, there are many many different competing self interest issues amongst the policy makers, the regulators, the approvers, the financiers, the suppliers, the supporters, you name it, it is competing to obtain the best outcome for its own survival and prestige. 80 different approvals required for the govt's own Energy distributor to build a gas receiving terminal in Java for example.

This new found strength of local interest is in itself a liability as nothing is sacred when it comes to looking after Indonesia's interests at the expense of foreign exploiters. Any company that chooses to do business in Indonesia and take money away from Indonesia is an exploiter btw. They won't have to look for any signs of corruption, it will replaced by the form of incrementally regulated forced concessions to proceed beyond the point of no return. The smiles for photos will remain the same throughout from the start to the day before goodbye.

Don't ever believe that Indonesia is a better long term exposure due to depth, thermal availability, etc etc. Geographics, demographics, politics, contract renewal or market growth opportunity and competition WILL whither away any perceived beneficial margin before time has replaced capital. The business may grow of course, everything is allowed to grow if it can within certain confines.

ifandwhen