Abolish free exchange system

Abolish free exchange system

From Merdeka

One-and-a-half years ago, apatriotic businesspeople -- most of them nonindigenous -- transferred more than US$100 billion in foreign exchange to Singapore.

This apatriotic economic measure was possible because of Indonesia's free foreign exchange system. The result was that the value of the dollar increased while that of the rupiah decreased drastically, the national economy became chaotic, unemployment was on the rise, the community's purchasing power declined and the poor members of the community got hungrier.

Experience has shown that a free foreign exchange system is suitable in a really strong economic situation, supported by patriotic entrepreneurs, like in Japan.

Actually, Indonesia does not lack foreign exchange because exports yield not less than $3 billion a month. But because the New Order has produced apatriotic businesspeople only, billions of dollars from exports have been turned into foreign exchange savings abroad.

It is odd that the government maintains this free foreign exchange system, which only benefits apatriotic businesspeople. Although Indonesia is the biggest palm oil producer, its people lack cooking oil. Palm oil is exported in big quantities but the government is low on foreign exchange.

In this economic and monetary situation, the Habibie government should be controlling foreign exchange. In doing so, the government could control foreign exchange earnings from exports and fix the dollar rate at, say, Rp 10,000. Furthermore, the government should give priority to the use of foreign exchange for imports that benefits development and the people's welfare.

With this fixed exchange rate, the business sector can adjust its activities according to the new, balanced situation.

RACHMAT BASOEKI SOEROPRANOTO

Jakarta