Transparency, consistency needed in banking sector<\/p>\n
JAKARTA (JP): To support the rupiah, the government should
\nimprove transparency in the banking sector, dismantle
\ninconsistent policies and give details of its reform package,
\neconomist Anwar Nasution said.<\/p>\n
Common people were still in the dark about the country's
\nbanking situation because the monetary authority had never stated
\nthe condition of each bank to the public, he said.<\/p>\n
\"Nothing is clear about our banking industry. Even Bank
\nIndonesia's weekly reports never tell us about the condition of
\nour banks,\" Anwar told The Jakarta Post.<\/p>\n
It was crucial for the central bank to improve transparency in
\nthe banking sector to restore the confidence of both foreign and
\ndomestic investors in the country's banking industry and
\ncurrency.<\/p>\n
Besides banking transparency, Anwar said the government should
\ndismantle or reschedule projects inconsistent with the
\ngovernment's current austerity policy to convince investors that
\nits reforms were broad enough.<\/p>\n
He named the national car and strategic industrial projects as
\nprograms which were draining the country's foreign exchange
\nreserves, while not producing any significant revenue in foreign
\nexchange.<\/p>\n
Pursuing and maintaining such ambitious, foreign exchange-
\nconsuming projects were not viable in the current situation when
\nthe country was in dire need of foreign exchange.<\/p>\n
\"Not only do they drain foreign exchange reserves, those
\nprojects, especially the tax and duty-exempted national car, also
\nburden the state, provincial and regency administrative budgets,\"
\nAnwar said.<\/p>\n
It burdened the state budget because the government had to
\nbear all duties and luxury taxes of the national car, the Timor
\ncar, imported from South Korea.<\/p>\n
Provincial and regency budgets were affected because their
\nadministrations were obliged to purchase a certain number of
\nTimor cars.<\/p>\n
Pursuing transparency in the banking sector and dismantling
\ninconsistent policies were not enough, as the central issue in
\nrestoring confidence would be the details of the multi-billion
\ndollar rescue package from the International Monetary Fund (IMF).<\/p>\n
\"To restore confidence, we must publicize the details, not
\nonly state the broad outline,\" Anwar said.<\/p>\n
If the government was targeting to reach a budget surplus of
\none percent of the gross domestic product in the current and next
\nbudget, it should explain in detail how it planned to reach such
\na surplus.<\/p>\n
\"We are in the dark about how the government will increase its
\nrevenue and reduce spending. We are waiting for the details,\" he
\nsaid.<\/p>\n
If the government wanted to raise tax rates, for instance, the
\nprivate sector would be eager to know which taxes the government
\nwould plan to increase.<\/p>\n
Information on cuts in governmental expenditures would also be
\nimportant for the private sector to anticipate which sectors,
\nparticularly which subsectors, would be most affected.<\/p>\n
\"Such details of the IMF package are important, particularly
\nfor the private sector to plan for the short and medium terms,\"
\nAnwar said.<\/p>\n
The IMF has put together a US$23 billion assistance package
\nfor Indonesia, supplemented by billions of dollars in bilateral
\ncommitments from several other countries, to bail out the country
\nfrom its economic crisis.<\/p>\n
Anwar also reiterated the importance of fiscal discipline by
\nincorporating all state revenues into the state budget and paying
\nall state expenditures from the budget.<\/p>\n
\"The situation now is similar with that in 1966 when all state
\ndepartments managed their own budgets by raising their own
\ntactical incomes,\" Anwar said.<\/p>\n
On top of this, the government needed to make a united
\nofficial statement concerning government actions, Anwar said.<\/p>\n
Coordination among government institutions and departments was
\nlacking, resulting in conflicting statements by different
\nofficials, he said.<\/p>\n
\"It is high time for government officials to make coordinated
\nstatements on one issue so that they do not create confusion for
\nthe public,\" he said. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/transparency-consistency-needed-in-banking-sector-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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