Further reforms needed to ensure certainty<\/p>\n
JAKARTA (JP): Economists and businesspeople hailed yesterday
\nthe government's decision to slash spending and delay major
\nprojects in a bid to convince foreign investors about its
\nseriousness in dealing with currency and stock market upheavals.<\/p>\n
But they said the government should continue to send other
\npositive signals to the market by further reforms and actions to
\nregain investors confidence in Indonesia.<\/p>\n
Minister of Finance Mar'ie Muhammad announced Tuesday a cut in
\nbudget spending on development programs amounting to Rp 3.28
\ntrillion (US$1.1 billion), or 8.4 percent of its development
\nbudget for the current 1997\/1998 fiscal year.<\/p>\n
State-related projects worth Rp 39 trillion (US$13.22 billion)
\nwould be postponed and other similar projects worth Rp 63
\ntrillion would be reviewed, Mar'ie said.<\/p>\n
But interested parties are still waiting on further details of
\nthe proposed cuts to assess the impact on earnings this year and
\nthe next.<\/p>\n
For instance, details of participants in some of the projects
\nwere lacking.<\/p>\n
\"The government is moving in the right direction. But the
\ndevil remains on details and implementations,\" said Raden
\nPardede, an economist at state-owned Danareksa Securities.<\/p>\n
He said the whole Southeast Asian region was overshadowed by
\nChina's reform program announced at the close of the ruling
\nCommunist Party's 15th congress last week.<\/p>\n
\"It means we have to do more than China to attract foreign
\ninvestment,\" he said.<\/p>\n
Former cabinet minister and economist Moh. Sadli said public
\nand private businesses should not blame the government for the
\ncurrent currency and stock market crises but instead help with
\ntheir own retrenchment program.<\/p>\n
\"We should not let the government fight alone. We must help
\nthe government by reviewing our consumption pattern and our
\nbusiness expansion program. It is time to eye our investment
\nplan,\" Sadli said.<\/p>\n
He said the retrenchment of major projects would slow down
\neconomic growth to about 5 percent this year and the next, but it
\nwas the most effective way of containing the current account
\ndeficit and avoiding a \"crash landing\" from the current crises.<\/p>\n
The International Monetary Fund (IMF) also applauded the
\ngovernment's action to cut budget spending and delay major
\nprojects.<\/p>\n
IMF's first deputy managing director Stanley Fischer described
\nthe move as \"a very good example of the way Indonesia has taken
\npositive action to deal with the crisis\".<\/p>\n
Industries hardest hit by the cutback measures include mines
\nand energy, public works and transportation.<\/p>\n
Among projects postponed were two oil refineries and 14
\nelectricity generation projects.<\/p>\n
Power projects<\/p>\n
Nine more power projects would be reviewed while 29 toll road
\nprojects were postponed, along with the $176 million Surabaya-
\nMadura bridge in East Java and 14 power generation projects.<\/p>\n
Director of electricity and energy development at the Ministry
\nof Mines and Energy, Endro Utomo Notodisuryo, said the decision
\nwould give a chance for state-owned electricity company PLN to
\nrenegotiate power purchase agreements with private power firms to
\nreach a \"fairer\" value.<\/p>\n
A power purchase agreement could be considered fair if private
\npower companies and PLN equally shared the risk of loss, he said.<\/p>\n
\"The current power purchase agreement put most of the risk of
\nloss on PLN,\" he said.<\/p>\n
Endro said he was not afraid the postponement of power
\nprojects would result in a lack of power supply in the future
\nbecause power growth demand would also decline following the
\npostponement of other giant projects.<\/p>\n
Finance director of publicly listed toll road developer PT
\nCitra Marga Nusaphala Persada, Tito Sulistio, also welcomed the
\ngovernment's move to reschedule some mega projects, including
\ntoll roads.<\/p>\n
The company would continue to develop the Waru-Tanjung Perak
\ntoll road project in Surabaya, East Java, as it had secured the
\nfinancing for the project, he said.<\/p>\n
The Waru-Tanjung Perak toll road project is included in the
\nlist of projects to be reviewed. This means the projects can go
\nahead as long as the investor has the finances.<\/p>\n
Tito argued that his company had raised Rp 500 billion from
\nthe rights shares issuance earlier this month. (jsk\/aly\/rid)<\/p>\n
Retrenchment -- Page 12<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/further-reforms-needed-to-ensure-certainty-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }