REPUBLIKA.CO.ID, YOGYAKARTA -- Head of the Yogyakarta representative office of the Indonesian Stock Exchange (BEI) Irfan Noor Riza calls for the government to restore political stability to encourage investment.

"Investors would hesitate to start business in the country under unfavorable political condition," Irfan said here on Saturday.

He said political condition and security are determinant factors for investors in considering business in a country.

If the government fails to maintain political stability investors would likely sell their shares, he said.

Withdrawal of large fund from the market has to be anticipated especially as foreign investment dominate the domestic stock market, he said.

Meanwhile, the rupiah value already shrank to more than 13,000 per US dollar in early March 2015. The impact was significant on foreign investors that tended to sell their shares resulting in share price fall. However, the share price fall would open an opportunity for local investors to collect shares.

"Almost all shares were hit by price fall . Increase was recorded only in the prices of a few stock such as mining, banking and service stocks," Irfan said.

Based on data from the Yogyakarta office of BEI, the number of investors in Yogyakarta totaled 10,167 with transactions valued at Rp207 billion by the end of December 2014, or up from 9,783 in November, 2014.

Economist from the University of Gajahmada Sri Adiningsih said Bank Indonesia (BI) hs to be able to minimize the volatility of rupiah, and the Financial Service Authority (OJK) has to guarantee that the stock market run normally.

If security is guaranteed, no cause for fear of capital flight, Sri said.

She said the country has been too dependent on portfolio investment and short term foreign loans .

The dependence makes the Indonesian financial system highly volatile , vulnerable to the impact of international economic turbulence, she said.

Meanwhile, the Indonesian Association of Construction Companies (Gapensi) asks its members to use rupiah in any financial transactions.

"It is an irony that we have no confidence in our currency," the secretary general of the association Andi Rukman Karumpa said in a statement on Saturday.

Andi said the call is expected to contribute to strengthen rupiah and regain its lost value against the US dollar.

He said the call is in line with Law No.7 of 2011 on the use of rupiah in any financial transactions.

Chapter 21 point 1 of the law rules the use of rupiah in any transactions including in payments, settlement of debts an other such transactions in the country.

He said he was confident rupiah would regain strength soon given a number of indicators that showed positive trend such as fiscal improvement, lower inflation, trade surplus and return of foreign capital.

Earlier, the Indonesian Chamber of Commerce and industry (Kadin) asked the government to take any steep necessary to stabilize rupiah.

"We hope the government could keep rupiah stable at the target level of Rp12,000-Rp12,500 per US dollar," deputy chairman of Kadin Yugi Prayanto.

Yugi said Kadin supports the policy of the finance minister and Bank Indonesia to keep rupiah stability.

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