Government urged to go all-out to stabilize rupiah<\/p>\n
JAKARTA (JP): Legislators and business leaders urged the
\ngovernment yesterday to go all out in stabilizing the rupiah's
\nexchange rate at Rp 4,000 to the U.S. dollar this year to help
\nIndonesia's ailing economy.<\/p>\n
They were commenting on the government's 1998\/1999 draft state
\nbudget unveiled Tuesday which was based on an average exchange
\nrate of Rp 4,000 to the dollar between April 1998 and March 1999.<\/p>\n
\"The government's goal to return the rupiah to Rp 4,000
\nagainst the dollar should be given top priority,\" the chairman of
\nthe United Development Party faction in the House of
\nRepresentatives, Hamzah Haz, said.<\/p>\n
Soeharto said in his speech Tuesday night the government did
\nnot want to see the rupiah too strong, thus weakening the
\ncountry's export competitiveness.<\/p>\n
Neither did the government want to let the value of the rupiah
\nbecome too weak, he said, as it would burden the country's
\neconomy.<\/p>\n
The rupiah further plunged to over Rp 8,000 to the dollar
\nyesterday.<\/p>\n
Hamzah said the 1998\/1999 budget was the most difficult one in
\nthe past 30 years.<\/p>\n
Legislators I Ketut Arcana and Eky Syachrudin said the
\ngovernment's decision to assume an exchange rate of Rp 4,000 for
\nnext fiscal year was a political move to restore market
\nconfidence.<\/p>\n
\"The government must have its own rationale to use the
\nexchange rate at that level,\" Eky, a member of the Golkar faction
\nat the House, said Tuesday.<\/p>\n
\"I think it's the President's political move. The rupiah must
\nbe strengthened to that level again, as Pak Harto's authority is
\nat stake,\" he said.<\/p>\n
Arcana, the chairman of House Commission VIII for state budget
\nand finance, called the decision a bold and commendable move.<\/p>\n
Arcana said the target's realization, however, would depend on
\nthe government's consistency in restoring confidence in the
\nrupiah.<\/p>\n
Some economists saw the exchange rate projection as
\nunrealistic and highly optimistic.<\/p>\n
Gadjah Mada University economist Arief Ramelan Karseno said
\nyesterday the targeted rate of Rp 4,000 would be very hard to
\nrealize.<\/p>\n
\"When President Soeharto delivered the draft budget, the
\nrupiah's value had sunk to Rp 7,900 to the dollar,\" he said.<\/p>\n
He said many sectors in the Indonesian economy would be
\ndisrupted if the target was not reached.<\/p>\n
If the rupiah continues to remain below Rp 4,000 to the
\ndollar, many companies could collapse under their foreign debts,
\ncausing more people to lose their jobs and slashing government
\nrevenue from taxes.<\/p>\n
University of Indonesia economist Anwar Nasution said the
\nrupiah would not strengthen unless effective and comprehensive
\neconomic reforms were carried out.<\/p>\n
Anwar said the rupiah would strengthen if people's confidence
\nin the government's measures and policies returned.<\/p>\n
\"The rupiah's value will continue to decline if the government
\ndoes not give a clear indication that it is really serious about
\nrestructuring the banking system and that it is helping to cope
\nwith the problem of huge bad loans,\" Anwar was quoted by Antara
\nas saying.<\/p>\n
Business leaders reacted more positively to the government's
\ntarget of stabilizing the rupiah at Rp 4,000.<\/p>\n
Noted businessmen Tanri Abeng and Sudwikatmono said the
\nexchange rate target was realistic and optimistic.<\/p>\n
Tanri, president of Bakrie & Brothers, said the exchange rate
\nwas reasonable compared to the current exchange rate.<\/p>\n
\"What is not realistic is the current exchange rate, because
\nit is the result of excessive speculation,\" Tanri added.<\/p>\n
PT Indocement president Sudwikatmono and hotelier Sukamdani
\nSahid Gitosardjono said the Rp 4,000 rate could be used for
\nbusiness transactions and for paying expatriate employees.<\/p>\n
Tanri Abeng said the government should convince the market
\nthat it would balance the supply and demand of dollars here.<\/p>\n
This could be achieved by helping the private sector rollover
\ntheir maturing short-term loans, Tanri added. (das)<\/p>",
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