A spur for efficiency

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