Experts, legislators unimpressed by Habibie's speech<\/p>\n
JAKARTA (JP): Economists and legislators were unimpressed by
\nPresident B.J. Habibie's Independence Day speech on Monday as it
\ncontained nothing new to solve the current economic problems.<\/p>\n
\"There's nothing new in the speech,\" said Pande Radja
\nSilalahi, an economist at the Centre for Strategic and
\nInternational Studies (CSIS), a prestigious private think tank.<\/p>\n
Budi Hikmat, an economist at PT Bahana Securities, said:
\n\"Habibie put pressure on the importance of the bank restructuring
\nprogram. We all know that. People are now waiting for the
\nimplementation.\"<\/p>\n
Habibie said in his state-of-the-nation address that the
\ncountry's crisis-hit economy was already on the recovery path.<\/p>\n
\"Several economic indicators show that our economy has entered
\nthe recovery stage,\" Habibie told parliament on the eve of the
\ncountry's 54th Independence Day.<\/p>\n
Habibie pointed out the strengthening of the rupiah over the
\npast year, negative inflation during the past five months,
\npositive economic growth in the first and second quarter of the
\nyear, and lower interest rates.<\/p>\n
But Habibie added that restoring the banking sector and
\nreviving the real sector are crucial in sustaining the economic
\nrecovery process.<\/p>\n
\"The economic indicators are still not enough to justify that
\nthe economy has recovered,\" Pande said.<\/p>\n
He said that the deflation rate reflected more of a weakening
\nin the people's purchasing power.<\/p>\n
Legislators also expressed disappointment over Habibie's
\nspeech.<\/p>\n
Ekky Syahruddin, a legislator for the ruling Golkar Party,
\nsaid that Habibie failed to address the most urgent issue of how
\nto handle the high profile Bank Bali scandal which has caused a
\nserious threat to the government's bank restructuring program.<\/p>\n
\"President Habibie should have mentioned a political move that
\nwould provide confidence to the public that there will be
\nchange,\" he said.<\/p>\n
Ekky said that Habibie only promised to take firm action, but
\ndidn't mention any clear plans.<\/p>\n
Although Habibie didn't mention the Bank Bali case in his 37-
\npage speech, he admitted that obstacles at the bank restructuring
\nprogram had contributed to the recent weakening in the rupiah.<\/p>\n
\"We are striving to settle things that hinder bank
\nrestructuring so that we can expect the rupiah to rebound,\" he
\nsaid.<\/p>\n
Bank Bali has paid some Rp 546 billion (US$78 million at the
\ncurrent rate) in commission to private firm PT Era Giat Prima
\n(EGP) to help the bank recoup some Rp 904 billion in interbank
\nclaims on closed down banks.<\/p>\n
EGP is a company controlled by two businessmen affiliated to
\nthe Golkar Party, raising speculation that the money was used to
\nhelp finance Golkar's campaigning activity during the recent June
\nelection.<\/p>\n
Reports also said that senior government officials and a
\ndeputy chairman at the Indonesian Bank Restructuring Agency
\n(IBRA) were also involved.<\/p>\n
Bank Bali was not supposed to pay commission as the interbank
\nclaims on closed down banks are guaranteed through the government
\nblanket guarantee program.<\/p>\n
Pande said that the Bank Bali scam caused a great loss to the
\neconomy as confidence plunged.<\/p>\n
The rupiah hit a low of Rp 8,250 to the U.S. dollar last week,
\nits lowest level since late April, in the wake of the Bank Bali
\nscandal and other political and external factors.<\/p>\n
Habibie also mentioned the importance to secure funds to help
\nfinance the state budget particularly as the cost of the bank
\nrestructuring program would peak over the next two years.<\/p>\n
The government, which is financing some 80 percent of the bank
\nrecapitalization program, has estimated that the bank
\nrestructuring cost will reach about Rp 550 trillion.<\/p>\n
Habibie said government spending will also be higher due to
\nthe continuing cost of repairing damage from last year's riots.<\/p>\n
In order to raise more funds domestically, Habibie said the
\ngovernment would seek to boost tax revenue to 16 percent of gross
\ndomestic product or around $5 billion to $7 billion a year from
\naround 11 percent of GDP now.<\/p>\n
He said the program to sell stakes in state-owned companies
\nwould also be able to reduce the country's dependency on foreign
\ndebts.<\/p>\n
Habibie also said that between 1999 and 2005, the government
\nexpected to be able to raise US$91 billion from the sale of
\nminority stakes in state companies.<\/p>\n
\"If the privatization of state enterprises and the
\noptimalization of tax revenues can be done in a sustainable way,
\nIndonesia will gradually be able to reduce its dependence on
\nforeign loans and even finance its development in a more
\nindependent manner,\" he said. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/experts-legislators-unimpressed-by-habibies-speech-1447893297",
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