Kwik upbeat rupiah will strengthen<\/p>\n
JAKARTA (JP): Newly appointed Coordinating Minister for
\nEconomy, Finance and Industry Kwik Kian Gie said on Wednesday
\nthat the rupiah could strengthen to Rp 6,000 against the U.S.
\ndollar if the new government could prove its commitment to uphold
\nthe supremacy of the law.<\/p>\n
Kwik said that upholding the supremacy of the law was key to
\nthe return of foreign investors' confidence into the country.<\/p>\n
\"I can't say when (the rupiah will strengthen to the Rp 6,000
\nlevel) because it's a matter of trust,\" he said in a press
\nconference following a meeting with President Abdurrahman Wahid,
\npopularly known as Gus Dur.<\/p>\n
Kwik was accompanied by five other economic ministers.<\/p>\n
The rupiah ended lower on Wednesday at Rp 6,910 against the
\nAmerican greenback as compared to Rp 6,785 at the previous day's
\nclose as investors took profit from the recent rally driven by
\nlast week's successful presidential election.<\/p>\n
Strengthening the rupiah is seen as a cornerstone toward the
\ncountry's economic recovery.<\/p>\n
The rupiah plunged to as low as Rp 17,000 to the dollar last
\nyear when the economic crisis deepened.<\/p>\n
Head of research at securities firm PT Vickers Ballas Tamara
\nFerry Y. Hartoyo said that although Indonesia now has a new,
\ncredible government, elected democratically, which would provide
\nsocial and political stability, foreign investors would remain on
\nthe sidelines until the new government could prove its commitment
\nwith reforms, and by particularly upholding the law.<\/p>\n
\"The most important thing is how to show that in Indonesia the
\nlaw is not discriminative,\" Ferry said.<\/p>\n
\"And the best way to start is with the resolution of the Bank
\nBali scandal,\" he added.<\/p>\n
Ferry said that foreign investors' confidence had plunged
\nfollowing the economic and political crisis, as reflected in the
\nfall in foreign direct investment (FDI) from US$111 billion in
\n1997 to $60 billion in 1998 and $11 billion in the first half of
\nthis year.<\/p>\n
\"That's only the approval figure, the realized investment is
\nmuch lower, possibly at about 30 percent,\" he added.<\/p>\n
He said that an increase in realized FDI would be significant
\nin boosting the value of the rupiah.<\/p>\n
The Bank Bali scandal centers around the legally dubious
\ntransfer of Rp 546 billion (about $80 million) in commission fees
\nfrom the bank to a private firm linked with influential people
\nclose to former president B.J. Habibie.<\/p>\n
The Habibie administration had been dragging its feet in
\nresolving the scandal as it declined to publish the
\nPricewaterhouseCoopers (PwC) audit report on the scandal as
\ndemanded by the International Monetary Fund (IMF).<\/p>\n
The IMF and the World Bank suspended loan disbursements after
\nIndonesia failed to honor its promise to publish the PwC report.<\/p>\n
The PwC report is now in the hands of the House of
\nRepresentatives, which will decide on whether to publish it or
\nnot.<\/p>\n
Kwik stressed that it's important to publish the report to
\nmeet the transparency demanded both from public investors and
\ndonor institutions, particularly the IMF.<\/p>\n
Kwik also said that the police must move quickly to resolve
\nthe scandal satisfactorily.<\/p>\n
\"Your role (the press) is important to check on how far the
\npolice have gone,\" he said.<\/p>\n
The police have arrested several people allegedly involved in
\nthe scandal but it has yet to take similar measures against the
\ninfluential people.<\/p>\n
Kwik said that resolving the Bank Bali scandal was key to
\namending the country's relations with the IMF as well as other
\ndonors.<\/p>\n
\"In the short term, Indonesia can't do without the IMF,\" he
\nsaid.<\/p>\n
Kwik pointed out that Indonesia had limited cash to finance
\nits own economic programs, including providing support for the
\npoor amid the current crisis.<\/p>\n
\"We don't want to lose one generation,\" he said, pointing to
\nthe threat of malnutrition and school dropouts among the poor.<\/p>\n
Ferry agreed that foreign loans were crucial to Indonesia.<\/p>\n
\"The budget deficit this (fiscal) year is estimated at $8-9
\nbillion. Next year it could double,\" he said.<\/p>\n
Meanwhile, Kwik also dismissed concerns that the new economic
\nteam would have difficulty in terms of cooperation and
\ncoordination.<\/p>\n
\"I'm sure that we can do it, because those who sit here are
\neducated bureaucrats and statesmen who work for the interests of
\nthe people,\" he said.<\/p>\n
\"There will be no difficulties in coordination ... give us a
\nchance (to prove it),\" he said.<\/p>\n
Analysts criticized the new economic team for being appointed
\nmore on political considerations rather than on capability to fix
\nthe crisis-hit economy. They particularly have reservations
\nabout Finance Minister Bambang Sudibyo, who is unknown to the
\nmarket, and Trade and Industry Minister Jusuf Kalla, a local
\nbusinessman deemed to have the lack of vision to bring the
\ncountry toward the globalization era.(rei\/prb)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kwik-upbeat-rupiah-will-strengthen-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}