Germany recommends better banking system<\/p>\n
By Oei Eng Goan<\/p>\n
JAKARTA (JP): Indonesia's sudden economic meltdown last July
\nhas so shocked friendly nations from within and outside the
\nregion that they are willing to lend a helping hand to try to
\nresolve the monetary crisis the country is facing.<\/p>\n
Leaders from Singapore, Malaysia, Brunei and Thailand --
\nfellow members of the Association of Southeast Asian Nations --
\nand high-ranking officials from major donor countries like the
\nUnited States, Japan, Britain and Germany, have visited Jakarta
\nto offer their help, indicating that they are not merely fair-
\nweather friends.<\/p>\n
Germany has demonstrated intensive activities during the past
\ntwo months after Chancellor Helmut Kohl made telephone calls to
\nPresident Soeharto at the beginning of the year, when the crisis
\ndeepened and a series of riots broke out in several towns
\nfollowing price hikes of food staples.<\/p>\n
\"After the phone calls, Chancellor Kohl sent a fact-finding
\nmission to Jakarta to see what Germany could do to help
\n(Indonesia) cope with the situation,\" German Ambassador Heinrich
\nSeemann told The Jakarta Post in an interview recently.<\/p>\n
The mission, led by former secretary of state Horst Kohler,
\nwho is presently the president of the German Savings Bank
\nAssociation, comprised economists and bankers, including Klaus
\nRegling, former IMF representative in Jakarta who is now director
\ngeneral of the Federal Ministry of Finance.<\/p>\n
After talks with President Soeharto and a number of Indonesian
\ndignitaries and World Bank and IMF officials here, the mission
\ndiscovered that one of the main problems the government is facing
\nis the offshore debts of the private sector, which amount to
\nUS$73.96 billion, Seemann said.<\/p>\n
Concern over Indonesia's alarming level of short-term foreign
\ndebt by the private sector has triggered a loss of confidence in
\nthe rupiah, which fell sharply from Rp 2,450 to the dollar last
\nJuly to the present fluctuating level of Rp 10,000.<\/p>\n
Seemann said the mission had come up with a three-point
\nproposal and recommended that:<\/p>\n
1. Indonesia badly needs a better supervisory structure for
\nits banking system;<\/p>\n
2. Bank Indonesia (the central bank) should act independently;
\nand<\/p>\n
3. Finding quick solutions to the problems to avoid a large
\nnumber of small and medium scale firms from bankruptcy.<\/p>\n
Citing the experience of the German central bank, the
\nBundesbank, in controlling the mark as Europe's strongest
\ncurrency, Seemann stressed the importance of Bank Indonesia to be
\nindependent in its operations.<\/p>\n
\"We have informed the central bank's former governor
\n(Soedradjad Djiwandono) and the incumbent governor (Sjahril
\nSabirin) that a central bank governor should demonstrate his
\nindependence and not become a member of the country's cabinet,\"
\nhe said.<\/p>\n
As a follow-up to Kohler's mission, the Bonn government sent
\nlast month a bigger delegation to Jakarta led by Finance Minister
\nTheo Waigel, who brought with him a group of parliamentarians, a
\ndozen professor and scores of business people to study the
\neconomic situation.<\/p>\n
\"Mr. Waigel has tried to formulate a program for
\ninstitutionalizing the banking supervisory system, which has been
\nagreed upon, and for the moment, both governments are still
\ntalking about the details,\" Seemann said. He did not elaborate.<\/p>\n
When asked about German assistance, he replied: \"We would
\ncontinue with our aid, but at the moment, it seems that it is
\nimportant for Indonesia to stick to the IMF agreement.\"<\/p>\n
The ambassador was referring to an agreement signed by
\nPresident Soeharto before the IMF director Michel Camdessus on
\nJan. 15 to win the fund's $43 billion bailout package to cope
\nwith the crisis.<\/p>\n
Seemann also expressed his optimism for the ongoing
\nnegotiations between Indonesia and the IMF regarding disbursement
\nof the aid, which was postponed following Jakarta's insistence
\nthat it needs to maintain the monopoly and control of some basic
\ncommodities for sometime to avoid public unrest.<\/p>\n
The IMF, however, considered it as backsliding on the part of
\nthe government.<\/p>\n
\"The IMF seems to be willing to look deeper into the
\nproblems... We are hoping very much that Indonesia and the IMF
\nwill soon reach an understanding and the two come together and
\nrestore confidence between the two sides,\" Seemann said.<\/p>\n
He also said the Bonn government has opened a credit of 300
\nmillion German mark ($165 million) to help Indonesia's small and
\nmedium-scale companies which are having difficulties in getting
\nletters of credit.<\/p>\n
Touching on bilateral ties with Indonesia, he said that
\nGermany, as a long-time friend, stands firmly by Indonesia and is
\nready to help develop the country's human resources.<\/p>\n
\"We believe in the country's future and we want to be
\nhelpful,\" he said, adding that one of the living proofs of his
\ncountry's interest here is the setting up of the German Center
\nfor Industry and Trade at Bumi Serpong Damai in Tangerang, 25
\nkilometers west of Jakarta.<\/p>\n
The topping off ceremony for the center, which provides
\ninformation for business people who want to stake their ventures
\nin the local market, will be held today.<\/p>",
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