Laws crucial for effective reforms<\/p>\n
JAKARTA (JP): Adequate legal infrastructure and transparent
\ngovernment will be critical to the success of Indonesia's painful
\nInternational Monetary Fund (IMF) sponsored economic reforms,
\neconomist Sri Mulyani Indrawati has said.<\/p>\n
The government and the legislative and judiciary bodies must
\nquickly introduce \"soft infrastructure\" such as antimonopoly and
\nbankruptcy laws, and amend the central bank law to support the
\nreforms, she said in a speech at the 48th anniversary
\ncommemoration of the University Indonesia on Saturday.<\/p>\n
\"Speeding up the availability of such infrastructure is
\ncritical to accomplishing the reforms effectively,\" she told The
\nJakarta Post after the ceremony.<\/p>\n
Sri Mulyani, head of the university's economic and community
\nresearch center, said the IMF-led economic reforms, which should
\nliberalize almost all sectors of the economy, would especially
\nbenefit foreign conglomerates with their large capital, superior
\ntechnology and extensive networks.<\/p>\n
Several local business groups might also gain, she added.<\/p>\n
If the government and the House of Representatives do not
\nquickly anticipate the changing market structure then the reforms
\nwill not benefit the public, she said.<\/p>\n
\"New laws relevant to the more liberalized market have become
\na priority that can't be delayed.\"<\/p>\n
The government has agreed to adhere to the IMF's wide-ranging
\neconomic reforms in return for a US$43 billion bail-out.<\/p>\n
Sri Mulyani, however, criticized the government for failing to
\ninitially provide well-prepared legal infrastructure essential
\nfor effective reform.<\/p>\n
To accommodate such a lack of initiative, a government
\ncredibility and transparent policy would be needed to win the
\nhearts of the public and the international community, she said.<\/p>\n
Many people say transparency is critical to boosting the
\ngovernment's deteriorating credibility.<\/p>\n
\"The national leadership factor and its credibility ... will
\nbe very important to winning support and cooperation from the
\npublic and market players,\" Sri Mulyani added.<\/p>\n
She cited several academic studies to support a theory that a
\npopular government supported by the masses and sensitive to
\ncrisis indicators such as rising inflation, dropping currency,
\nand collapsing production units was important to accelerate the
\nimplementation of the reforms.<\/p>\n
She argued, however, that although the dominant Golkar won a
\nlandslide victory in last year's general election, this wasn't a
\nguarantee of swift decision making.<\/p>\n
She said Indonesia took about six months from the start of the
\neconomic crisis in July to reach an agreement on the IMF's
\nradical reforms.<\/p>\n
\"The dominant role of a certain pressure group in the
\nadministration has eliminated flexibility in the decision-making
\nprocess.\"<\/p>\n
She said the government had become a hostage of the economic
\ninterest group.<\/p>\n
This situation led to the government's lack of sensitivity to
\ncrisis indicators, she said.<\/p>\n
\"This is reflected in various government comments which have
\nappeared to deny the facts of the crisis or refuse to accept the
\nmarket's signal to implement reforms.\"<\/p>\n
She said the current regime was successful in its past
\nreforms.<\/p>\n
This was attributed to the strong executive under the
\npresidency of Soeharto; his strong support for technocrats under
\neconomist Widjojo Nitisastro; the government's superior
\ncredibility due to its success in delivering high economic growth
\nand lower inflation, and less poverty; a neutral armed forces;
\nand the role of foreign investors.<\/p>\n
She said factors such as income disparity, corruption and
\nnepotism had played parts in eroding the government's
\ncredibility.<\/p>\n
Political reforms were needed, and \"at the lower levels it's
\nbureaucratic reform,\" she said. (08)<\/p>",
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"sponsor": "Okusi Associates",
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