Terror: how real is the threat to business? The smiling face of Bali bomber Amrozi bin Nurhasyim, cheering as his own death penalty was handed down in a Denpasar court in early August, has been one of the most chilling images so far in Asia's war on terror

Business Asia, Sept, 2003

Amrozi's capture and trial, along with fellow bombers Iman Samudra, Ali Imron and suspect Ali Ghufron, have kept terrorism in the news spotlight.

Further threats from terror group Jemaah Islamiyah, plus various governments' continuing aggressive stance on combating militant groups, seem to paint a bleak picture for Asia's security situation. Business, particularly now exporters to the region, could be forgiven for giving up and seeking "safer" places to trade. But is the perception of "terror" greater than the reality of doing business in Asia, particularly in supposed hotspots like Indonesia?

Terror threat

On the surface, the situation looks grim for business. Newspapers and television news across the region have kept a strong focus on terrorism as tragedies and successes occur.

The most apparent threat seems to be that of regional terrorist group Jemaah Islamiyah (JI), the organisation blamed for last year's Bali bombing and the Jakarta car bombing in August. JI is believed to be linked to global terror group al-Qaeda and has stated its intention of setting up an Islamic state in South East Asia.

The region's governments, stung into action by events such as Bali, have cracked down on the group, last month securing the capture of JI's suspected operational chief Hambali in Thailand. More than 200 people have also been detained in Indonesia, Singapore and Malaysia for their links to JI.

Concerns that more attacks will occur, however, are still high. The International Crisis Group, an independent organisation that monitors conflicts worldwide, says JI probably has "thousands of members" spread across the Indonesian archipelago and "remains dangerous" despite the recent arrests and tightened security measures.

The ICG report, titled "Jemaah Islamiyah in South-East Asia: Damaged but still Dangerous", said that the bombing of the Marriott hotel in Jakarta in early August this year "provided clear evidence that the organisation remains capable of planning and executing a major operation in a large urban center". The report said that JI was set up as a military organisation, and that all the senior members of its central command trained in Afghanistan in the late 1980s and early 1990s. The report describes the group as similar to "a giant extended family", where security is ensured through inter-marriage.

Toughing it out

While reports like this may cause alarm for the casual observer, investors and businesses in Asia, particularly in troubled South-East Asian nations, seem to be staying in the region and toughing it out.

Since the Jakarta hotel bombing, Indonesian stocks have risen 18 per cent. India, which had car bombs kill at least 50 in Mumbai earlier this year, has seen its shares rise by eight per cent. Stocks are booming in Thailand as well. Even the Philippines, which continues to battle Muslim separatists and experienced an attempted military coup in July, has only seen its stock market fall by 1.2 per cent.

For new, it's clear that investors are showing an increased appetite for Asian shares. The region's economic growth prospects continue to improve, especially now that larger economies such as the US, Japan and some in Europe may be stabilising. What's even more encouraging is that investors and business seem to be differentiating risks between countries and not just bundling the entire region as one big trouble spot--the fact that Philippine stocks are down while Indonesia's are up is proof of that.

Austrade's senior trade commissioner for Indonesia Michael Abrahams said that while the situation is tough on business, the rewards could be high.

"You have to look at those who have stayed--the 400 Australian companies who have stayed against the backdrop of Bali and the Jakarta bombing and against the fact that they had to factor risk management and risk mitigation into all their business plans--they obviously made a decision that the rewards still outweigh the risks," he said.

"I think there's a degree of optimism amongst the Australian business community that the cycle will turn, and you're better coming in down here than up there."

Security aware

Despite the optimism, the region's governments are aware that businesses still have concerns about security and have accordingly upped their measures to combat terrorism.

In Indonesia, for example, many of the luxury hotels in the capital have set up checkpoints away from the hotel building with armed security guards to inspect all vehicles--inside and underneath. Guests also have to pass through metal detectors and have bags inspected. Similar strict measures can be witnessed in the Philippines.

On a regional basis, forums such as APEC and ASEAN have had security and ways to combat terrorism as key agenda points since the September 11 New York attacks of 2001.

Businesses on the ground in South East Asia are appreciative of the increased and more visible security measures. Penny Robertson, principal of the Australian International Schools in Jakarta and Bali, said that there has been a huge increase in security both in terms of awareness and activity in Indonesia.