A spur for efficiency

The government's decision to abandon the intervention band for the rupiah constitutes a realistic answer to our national currency's wildly fluctuating exchange rate. Experience has shown that intervention, which depletes our foreign exchange reserves, does not always have the desired effect.

The absence of an intervention band, which creates a condition of real flexibility, pushes business into a situation of uncertainty. In the short run, this may make cost calculation difficult for our businesses. Difficulties may also be faced by borrowers of dollars, especially if the loans are used to sell products that are paid for in rupiah.

In our opinion, the current development may serve as a reminder of the importance of relying on quality, punctual delivery, after-sales services and an efficient production process to ensure competitiveness. Prices can no longer be relied on because they are too vulnerable to fluctuations and because of the entry of new competitors.

Our business world must have the faculty to recognize the signal that has been given by the government in its handling of the rupiah's fluctuations. After all, the government promised to intervene indirectly whenever necessary, either by monetary or fiscal means.

In our opinion the present turmoil in the money market is not just a passing storm. Rather, it is a spur for us to establish efficiency in our economy and society, so that we will be capable of challenging the competition in the coming century. We hope a healthy coordination can be established between the government and our business world in order to achieve agreement as we aim to attain our targets and objectives.

The government should continue to eliminate existing distortions and establish a healthy business climate. It should also make available the economic indicators that can help the business community analyze foreign exchange, interest rates and inflationary movements.

-- Bisnis Indonesia, Jakarta