Businesspeople hail massive spending cuts<\/p>\n
JAKARTA (JP): Businesspeople and analysts welcomed the massive
\nspending cuts announced by Minister of Finance Mar'ie Muhammad
\nyesterday but said they are not enough to strengthen the
\nfundamentals and competitiveness of the national economy.<\/p>\n
\"I see the spending retrenchment as a very positive signal to
\nthe market and very conducive to maintaining stability of the
\nrupiah at its new equilibrium rate,\" said chairman of the Gemala
\nGroup, Sofjan Wanandi.<\/p>\n
Sofjan said businesspeople need more technical and specific
\ndetails of the spending cuts to help make the necessary
\nadjustments.<\/p>\n
\"In a situation like this, the business community, including
\nthose overseas, require firm certainty which is possible only
\nwhen the government provides a clear-cut direction through well-
\ndefined policy guidelines,\" Sofjan added.<\/p>\n
He said many of the measures announced by the government
\nthrough Mar'ie's report at the House of Representatives' plenary
\nsession were still too general.<\/p>\n
\"We, for example, want to know more details on which projects
\nwill be rescheduled or reviewed. We also want to be apprised of
\nthe schedule for the gradual easing of the tight monetary
\nmeasure,\" added Sofjan, also spokesman for the Prasetya Mulya
\nforum of conglomerates.<\/p>\n
The government, he said, needs to elaborate on additional
\nincentives to be granted to exports and on consumer goods to be
\nsubjected to higher luxury sales taxes.<\/p>\n
Sofjan also questioned why the government did not specify the
\nmeasures to be taken to remove market distortions such as
\nmonopolistic practices which are hindering exports and affecting
\noverall economic efficiency.<\/p>\n
\"All these additional measures are essential to restore
\nbusiness certainty which has been devastated by the rupiah
\nturmoil and the credit pinch,\" he said.<\/p>\n
According to Sofjan, many businesses are now in dire straits
\nas a result of the currency crisis and the credit crunch.<\/p>\n
\"We hope that if some bona fide, well-managed businesses
\ndefault on their foreign debts the government will help bail them
\nout because such a failure is not caused by their mistake but
\nrather by force majeure created by the rupiah turmoil,\" he said.<\/p>\n
Economist Faisal Basri wondered why projects with high risks
\nand funded with high-interest debts were not rescheduled while
\nthose already well-prepared and financed with low-interest loans
\nwere postponed.<\/p>\n
Faisal cited the national Timor car program, the one million
\nhectare rice project on swamp land in Central Kalimantan and the
\nso-called strategic industrial projects, namely aircraft
\ndevelopment, as highly risky.<\/p>\n
\"Why have projects, which have been well-prepared and funded
\nby low-interest loans under the Consultative Group on Indonesia
\n(creditor consortium) been rescheduled?\" he asked.<\/p>\n
\"I think projects using funds from the state budget must be
\ngiven top priority as they have been approved through a healthy
\nprocedure,\" Faisal said.<\/p>\n
Faisal criticized ministers involved in the decision making
\nprocess for the spending cut for their lack of courage to push
\nwith rational measures.<\/p>\n
\"I am sure they are not so stupid. There must have been
\npolitical intervention that forced them to decide on such
\nmeasures,\" he added.<\/p>\n
Managing chief for the World Bank in Indonesia, Dennis de
\nTray, saw the budget spending cut as a normal and rational
\nmeasure in view of the anticipated decline in state revenues as a
\nresult of the currency turmoil.<\/p>\n
He said government revenues would decline because of a weaker
\nrupiah, higher interest costs and the temporary decline of
\neconomic activities.<\/p>\n
\"It is therefore important the government reschedule some
\nprojects in order to offset the decline in its revenues,\" he
\nsaid.<\/p>\n
\"It is also important the government delay the right projects
\nand continue to invest in the core aspect of development... in
\nhuman resources and property reduction,\" he said.<\/p>\n
An executive of the All Indonesian Workers Association, Bomer
\nPasaribu, foresaw an increase in the rate of open unemployment
\nand underemployment to 40 percent of the total labor force this
\nyear and next year from 38 percent last year as a result of the
\nspending cut.<\/p>\n
\"I think the massive retrenchment will lower economic growth
\nto 5.5 percent this year. This means less job creation,\" Bomer
\nsaid. (rid\/aly\/das\/vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/businesspeople-hail-massive-spending-cuts-1447893297",
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