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