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.