The New Asian Reality

Southeast Asia's economies could ride exports to a rebound--if governments would step out of the way

Sofyan Wanandi is feeling the pain. As chief executive of the $520 million Gemala group, an Indonesian conglomerate that makes everything from chemicals to car batteries, he is upset by Bank Indonesia's Aug. 18 decision to jack up treasury rates to 30%. The idea was to entice investors to hold rupiah, and so keep the nation's currency from tumbling further. But the policy has had a nasty side effect. His key distributors are socking away their cash in bank deposits instead of placing orders for Gemala's goods. "The business community is reeling," says Wanandi.

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