Opposition parties offer alternatives<\/p>\n
JAKARTA (JP): Two major opposition political parties may
\nintroduce fundamental changes in Indonesia' economic policy if
\nthey win the upcoming June 7 general election.<\/p>\n
The Indonesian Democratic Party of Struggle (PDI Perjuangan)
\nsaid on Thursday it would seriously consider reintroducing a
\nfixed exchange rate system to bring the rupiah to around Rp 5,000
\nagainst the US dollar in order to spur an economic recovery.<\/p>\n
The party's economic adviser, Kwik Kian Gie, said the crippled
\nbusiness sector could repay its debts and resume production only
\nif the rupiah strengthened to the Rp 5,000 level, especially
\nbecause the manufacturing industry relied heavily on imported raw
\nmaterials.<\/p>\n
He was addressing a seminar on Indonesian business prospects,
\nin which the economic advisers of four other major political
\nparties, including the ruling Golkar Party, also presented their
\neconomic platforms.<\/p>\n
Leading opposition parties the National Awakening Party (PKB),
\nthe National Mandate Party (PAN) and the United Development Party
\n(PPP) said they would make creating a system of good governance
\nand providing greater support to small and medium-size businesses
\ntheir top priority.<\/p>\n
The ruling Golkar Party said it would focus on restructuring
\nthe debts of small and medium-size businesses in order to restore
\ntheir production rates to 1996 levels.<\/p>\n
\"I think in this situation, we have to go back to that
\nsystem,\" Kwik said, referring to the fixed exchange rate system
\nwhich Indonesia employed between the late 1960s and the 1970s.<\/p>\n
The country has been devastated by the current economic
\ncrisis, which began in August 1997 when the rupiah collapsed
\nafter the government abandoned its managed float system and
\nallowed the rupiah to move in a free float system.<\/p>\n
The rupiah plunged to more than Rp 17,000 to the dollar in
\nJanuary, compared to around Rp 2,400 to the dollar before the
\ncrisis began. Strengthening the rupiah is the cornerstone of the
\ncountry's economic reform programs.<\/p>\n
The rupiah is currently hovering at around Rp 8,800 to the
\ndollar.<\/p>\n
Kwik said his party would endeavor to reintroduce the fixed
\nexchange rate system if it won the general election, but added it
\nwould first seek international support for such a drastic move.<\/p>\n
He explained that the support of the international community
\nwas essential because the country would need more than US$20
\nbillion in foreign loans to bolster its foreign exchange reserves
\nin order to make the system credible.<\/p>\n
Early last year, then president Soeharto mulled reintroducing
\nthe fixed exchange rate system under the currency board to
\nstabilize the currency, but the plan was dropped after strong
\nopposition from international creditors, most notably the
\nInternational Monetary Fund (IMF).<\/p>\n
Kwik urged the IMF, which has been organizing a multibillion
\ndollar economic bailout for Indonesia, to review its programs for
\nthe crisis-hit country.<\/p>\n
\"Do they (the IMF) really believe that by following this (the
\nIMF's reform programs) the rupiah will be strengthened,\" Kwik
\nasked.<\/p>\n
However, PAN secretary-general Faisal Basri, who also is an
\neconomist, disagreed with Kwik.<\/p>\n
\"Introducing a fixed exchange rate system will require a
\nstrong banking sector,\" he said.<\/p>\n
He prefers a capital control system like the one currently
\nemployed by Malaysia.<\/p>\n
He said such a system would quell currency speculation because
\nit would curb the full convertibility of the rupiah against
\nforeign currencies.<\/p>\n
He said a capital control system would allow an immediate drop
\nin domestic interest rates, fueling economic recovery.<\/p>\n
Indonesia is scheduled to hold its first free and open general
\nelection since the fall of former president Soeharto last May.
\nMany foreign investors are postponing investments in the country
\nto await the outcome of the election.<\/p>\n
Chairman of the Indonesian Chamber of Commerce and Industry
\nAburizal Bakrie hailed the five political parties for their
\neconomic platforms, which he saw as \"probusiness\".<\/p>\n
\"We should not be afraid of the general election or the
\ncountry's next government because it's clear these parties are
\nprobusiness,\" he said.<\/p>\n
He urged investors not to wait for the completion of the
\nelection before investing in the country.<\/p>\n
PAN chief Amien Rais said he was optimistic about the future
\nof the economy because of the country's rich natural resources,
\ncheap labor and large potential domestic market.<\/p>\n
Amien pledged to honor the state's business contracts with
\nforeign investors if he won the election, and said he would
\nencourage businesspeople to return the money they moved overseas
\nback to the country. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/opposition-parties-offer-alternatives-1447893297",
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