Analysts urge establishment of credible cabinet

JAKARTA (JP): Economists expect the upcoming cabinet to be a credible one to help solve the country's ongoing economic crisis.

Both domestic and foreign investors hope the new cabinet will be able to rebuild confidence in the government and the country's markets, said Umar Juoro, a senior economist at the Center for Information and Development Studies.

The private think tank is connected to newly elected Vice President B.J. Habibie.

"Confidence in the government is currently low," he said.

He explained that Indonesians were hoping the new cabinet could deal with the problem of providing staple goods at affordable prices.

The current economic crisis has seen prices of basic commodities skyrocket, prompting riots and looting in several areas of the country.

Umar said the international community was looking for the cabinet to rebuild confidence by implementing economic reform programs prescribed by the International Monetary Fund (IMF) and agreed to in a letter of intent by President Soeharto in January.

Umar, however, doubted whether the cabinet would fully implement the reform programs and meet international expectations, judging by the names widely rumored to be included in the ministerial posts.

He pointed out that timber tycoon "Bob" Hasan was tipped to be the new industry and trade minister.

Bob is a long confidante of President Soeharto and also is the chairman of the country's controversial Association of Indonesian Wood Panel Producers (Apkindo), which has been closed down under the IMF reform program.

"It would be useless if the new cabinet is filled with cronies like Bob Hasan, Tanri Abeng and Fuad Bawazier," said Hartojo Wignjowijoto, an economist at the Asia Pacific Economic Consultancy.

Tanri Abeng is a prominent business executive who, together with Director General of Tax Fuad Bawazier and a few other power elites, run the Council for Monetary and Economic Resilience, established by President Soeharto to deal with the crisis.

Hartojo stressed that reformists should be incorporated into the cabinet, otherwise confidence in the country would further deteriorate.

The chairman of the Center for Corporate Leadership, Subarto Zaini, agreed and suggested that President Soeharto appoint Emil Salim as minister of finance.

By choosing Emil, who strove for the vice presidential post but failed, Soeharto could show the international community that he is determined to reform and democratize this country, he said.

"Why not? He's clean, bright and, most of all, accepted and trusted by the international community," he said.

Many believe that Habibie, a 61-year-old German-trained engineer, will have much influence in the formation of the new cabinet. This has worried investors and the IMF since the former research and technology minister has a controversial reputation for supporting big-budget projects and unorthodox economic views.

Former legislator Tadjudin Noer Said suggested that Habibie would be more moderate in running the country, and would not continue to support ambiguous, foreign exchange-consuming projects.

He called on Soeharto and Habibie to select the best people for the next cabinet according to their expertise so the positions would be filled with capable leaders.

Umar, however, believed that although Habibie would have more influence over state affairs than his predecessors, Soeharto's eldest daughter, Siti Hardiyanti Rukmana, would enjoy a more influential position in selecting cabinet ministers.

Hardiyanti is a businesswoman and a key executive in the dominant Golkar political organization. Over the past few days, she has strongly criticized the IMF, which has postponed its second US$3 billion tranche of $43 billion in bailout funds to Indonesia.

Pande Raja Silalahi, an economist with the Centre for Strategic and International Studies, said such inward-looking, nationalistic stances could be counterproductive in building international confidence in Indonesia.

"I have learned that the international community is concerned over whether the next cabinet will be comprised of some inward- looking people. Therefore, I hope the President will choose outward-looking people to sit in the next cabinet," he said.

Hartojo also suggested the cabinet focus on quickly stabilizing the rupiah, tackling unemployment and boosting the role of small and medium-sized businesses in the economy.

Unemployment has not only affected the unskilled labor market, but also well-trained and experienced white collar workers, he said, adding that solving the problem would boost the country's stalled production industry. (08/rid)