Emergency measures<\/p>\n
Instead of simply tinkering with the figures of basic
\nassumptions on key economic indicators, the Indonesian government
\nis now preparing what should have been in place and firmly
\nimplemented since at least last year. Chief economics minister
\nDorodjatun Kuntjoro-Jakti said on Tuesday that the government is
\nnow preparing a package of emergency measures to prevent the
\neconomy from total collapse.<\/p>\n
That announcement reflects the government's full realization,
\nalthough rather belatedly, that it should now act firmly to set
\nin motion a crisis management mechanism to cope with a severely
\ncritical condition, which has been worsening due to the grimmer
\noutlook of the global economy as a result of the September 11
\nterrorist attacks on the United States.<\/p>\n
The revised key assumptions used for the 2002 state budget,
\nincluding a lower economic growth of 4 percent, average rupiah
\nrate of Rp 9,000 to the American dollar, average interest rate of
\n14 percent and inflation rate of 9 percent, are all realistic
\ngiven the bleaker economic outlook for most of Indonesia's
\nlargest trading partners.<\/p>\n
However, the new assumptions will not mean anything in the way
\nof reviving confidence in the economy if the main causes of the
\neconomic bleeding do not get urgent and intensive treatment under
\nthe auspices of what we have often suggested as being a separate
\ncrisis management center.<\/p>\n
In another encouraging signal, Dorodjatun also said the
\ngovernment would soon convene a national brainstorming conference
\nto gather suggestions from various institutes and organizations
\non how the right set of emergency measures should be packaged
\nand enforced. This shows that the government is aware that it
\nbadly needs a supportive social and political environment to cope
\nwith the economic crisis.<\/p>\n
Hopefully, it will not take much longer to formulate the
\npackage of appropriate emergency measures as the bleeding has
\nsteadily been weakening the economy.<\/p>\n
Whatever suggestions are proposed by domestic think tanks and
\nmultilateral agencies, such as the World Bank and International
\nMonetary Fund, one thing is crystal clear: the package of
\nemergency measures should include asset recovery, debt
\nrestructuring, fiscal consolidation and privatization of state
\ncompanies.<\/p>\n
As we and most other analysts have often argued in this
\nnewspaper, a faster pace of asset recovery would reinvigorate
\nhundreds of companies through the infusion of new capital and new
\nmanagement, and would help plug the hole in the budget. An
\naccelerated process of debt restructuring would enable many other
\nbusinesses to obtain new working capital loans and the government
\nto retire bonds used to recapitalize banks early. This would in
\nturn reduce bond interest expenditure, which has been a major
\ncause of the budget hole.<\/p>\n
Equally positive impacts would accrue from the privatization
\nof selected state companies, as proceeds from the sales would
\nhelp cover the budget deficit and new investors would improve
\nefficiency within the companies. Reduction of wasteful subsidies
\nand more vigorous tax collection would enable the government to
\nset aside bigger allocations for social safety net programs and
\nother labor-intensive projects for economic pump priming.<\/p>\n
All of these measures have actually been stipulated in the
\nseries of reform agreements between the government and the IMF
\nsince November, 1997. They are also the emergency measures
\nimplemented by other crisis-hit countries such as Thailand and
\nSouth Korea, which have now seen much stronger economic
\nrecoveries.<\/p>\n
Critically absent in Indonesia is a lack of urgency being
\nadopted among the three branches of government -- the executive,
\nlegislature and judiciary -- as reflected by the \"business-as-
\nusual\" manner in which the government is managing the economic
\ncrisis.<\/p>\n
It is now high time for the whole government to unite in
\nsetting in motion a crisis management center to implement
\nwhatever emergency measures are necessary to resolve the crisis.
\nWithout compromising their respective independence, the three
\nbranches of government, as well as local administrations and
\nlocal legislatures, should now think about and implement only one
\nagenda: leading and managing to resolve the crisis.<\/p>\n
Further delays caused by political bickering or due to
\ninordinate nationalistic sentiment will only worsen the suffering
\nof the people who have been living in great pain since the
\noutbreak of the economic crisis in late 1997.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/emergency-measures-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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