Soeharto's challenge<\/p>\n
Historians 50 years hence will undoubtedly view President
\nSoeharto's ascension to power in 1965 as a turning point in the
\nfortunes of Southeast Asia. When he first took office, seven in
\n10 Indonesians lived in absolute poverty. Thirty-three years
\nlater, the country is \"within striking distance\" of eliminating
\npoverty altogether, according to the World Bank. By any measure,
\nthis is a heroic achievement. Mr. Soeharto's heart-felt speech
\nlast Sunday to the People's Consultative Assembly (MPR),
\ndetailing the frightful impact of the currency crisis on his
\ncountry, was the cry of a man who now sees this remarkable
\nachievement threatened by the rude and merciless forces of global
\ncapital. \"It seems that everything we have built, with great
\ndifficulty, sometimes with pain and sacrifice, has suddenly been
\nundermined,\" he said. Arguing that the economic reforms mandated
\nby the International Monetary Fund (IMF), in exchange for its
\nUS$43 billion rescue package, are not working, he called for an
\n\"IMF-Plus\" alternative. His anguish was palpable, his impatience
\nunderstandable, but his call was misplaced.<\/p>\n
What ought to be the aim of Indonesian policy can be
\nencapsulated in three words: restore market confidence. The key
\nto that is just three initials: IMF -- not plus or minus some
\nfraction, but as an integer, a whole package of necessary
\nreforms. Thailand and South Korea, two troubled economies with
\nIMF programs, have realized that and their diligent pursuit of
\npainful reforms is already bringing back stability. By contrast,
\nMr. Soeharto's government, in his own words, has carried out only
\n\"parts of the program\". That is not enough. Key reforms,
\nincluding the ending of monopolies and privileges enjoyed by the
\npolitically well-connected, have been barely initiated. And the
\nreforms that have been initiated thus far -- including a
\nrationalization of the banking system and the ending of subsidies
\nfor wasteful projects -- have been pursued half-heartedly.
\nClearly, if the IMF program is not working, it is because it has
\nbeen barely put to work. Granted, difficult changes cannot be
\neffected overnight, and markets, not to mention foreign
\ngovernments, need to be patient. But they can be patient only if
\ntheir patience is not tried. Regrettably, the Indonesian
\ngovernment seems to have done just that. The latest \"IMF-Plus\"
\nstatement is an example. Referring to the scheme to peg the
\nrupiah to the dollar via a currency board, Mr. Soeharto revealed
\nthat he was now \"carefully and cautiously contemplating\" its
\npossible adoption, and challenged international institutions that
\nhave objected to it to suggest alternatives. There is no need
\nhere to belabor the obvious: under present circumstances,
\nIndonesia simply does not have the foreign reserves to make it
\nwork.<\/p>\n
The essential point, however, is that the IMF, a body whose
\naid is essential to Indonesia's economic survival, has voiced its
\nreservations about a currency board. The Indonesian government's
\ncontinued on-off-maybe flirtation with a proposal that many
\nbelieve cannot be sustained, undermines international confidence.
\nNothing can be done -- nothing will be done -- as long as that
\nconfidence continues to be trifled with. In the meantime,
\nurgently required measures that promised relief have been put on
\nhold. Negotiators on the rescheduling of debts have been treading
\nwater. Steps to recapitalize ailing banks have hit a wall as the
\nWorld Bank and other bodies have delayed their aid. And the
\nproposal to guarantee letters of credit, now doubly urgent as
\nhyperinflation becomes an increasingly real possibility, has been
\nput on the backburner. Mr. Soeharto told his countrymen: \"Our
\nfate rests in our own hands.\" He could not have uttered a truer
\nword. That fate hangs poised, heavy with destiny, waiting to be
\nshaped. There is still a chance it can be shaped towards a happy
\nend. But that chance has to be grasped now, or it will slip away.<\/p>\n
-- The Straits Times, Singapore<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/soehartos-challenge-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }