Action against militias may help strengthen rupiah
Action against militias may help strengthen rupiah
WASHINGTON (Dow Jones): Indonesia's Coordinating Minister of Economy and chief negotiator with the International Monetary Fund Rizal Ramli Tuesday expressed optimism that the government would bring its military forces under control, a key to improving confidence in the economy.
"I do believe that with the firm action we have taken in West Timor, and the firm action we have taken with respect to the bombing in Jakarta, the rupiah will stabilize," Rizal said during remarks to the U.S.-Indonesia Society.
International outrage over the deaths of three United Nations aid workers in East Nusa Tenngara or now also known as West Timor increased the pressure on Indonesia to crack down on militias who fought independence in East Timor and then terrorized refugees in West Timor. Soldiers have been implicated in the deaths of the aid workers and in a series of Jakarta bombing incidents.
Indonesia has told the militia to disarm in three days, and has promised to use military action to enforce order. Human rights groups working in West Timor say disarmament so far has been incomplete to say the least.
"There has been a significant surrender of arms of the last few days, but I agree it is not enough," Rizal said. " That is why we are issuing a warning and will enforce that warning with action," he added.
While the rest of Asia has experienced dramatic economic and financial recovery from the crisis which began in the region in 1997, Indonesia, plagued by constant political uncertainty, continues to suffer financial market volatility. Although the international donor community, led by the IMF and World Bank, have provided billions in financial support, implementation of economic reform programs has been spotty.
Rizal, barely a month on the job, outlined a detailed plan to improve the economy and expressed optimism that President Abdurrahman Wahid's new cabinet would work more cohesively and successfully together.
"This is important because we are in a crisis," Rizal said. According to government figures, Indonesia's economy has been growing since the second quarter 1999. The IMF program envisions gross domestic product growth of 3 percent to 4 percent for 2000. But those rates are less impressive when one considers GDP contracted over 16 percent during some quarters of the recession in 1998, the IMF said Monday.
In its annual review of Indonesia's economy, the IMF also expressed disappointment with the pace of structural reforms in Indonesia, and urged the government to speed up corporate debt restructuring. The fund also recommended Indonesia take a cautious approach to extending more political control to regional governments.
Rizal said decentralization of political power is something Indonesia has to accomplish to head off increasing demands for autonomy of its regions and political unrest.