Any extension of transitional govt will be costly: Emil
Any extension of transitional govt will be costly: Emil
JAKARTA (JP): Noted economist Emil Salim warned President B.J.
Habibie on Tuesday that any extension of his transitional
administration would create a huge economic cost for the crisis-
hit country.
He said that badly needed investment would not arrive until a
new government resulting from a fair general election had been
formed.
"A longer transitional period will have an expensive cost,"
the former environment minister told reporters on the sidelines
of a seminar on forestry.
He urged the government to implement a free and fair general
election because it would be a determining factor for investors
contemplating whether to invest in the country.
"People are now questioning whether the general election will
go smoothly," he said.
A new government should be established immediately after the
general election, he added.
The country is currently experiencing its worst economic
crisis in three decades. Analysts say foreign investment will be
the primary means of recapitalizing the battered economy.
Investors, however, have expressed concern over the country's
political instability, partly due to the transitional status of
the current administration.
Habibie took over the country's leadership in May from his
mentor Soeharto, who quit after massive rioting rocked the
country in the middle of the month.
The new administration has been shaken by a continuous wave of
student protests questioning the government's sincerity over
delivering political reform which would enable a free and fair
general election to be held quickly.
The House of Representatives (DPR) is expected to pass a new
law on a reformed electoral system in January.
The government, however, has said that a general election
cannot be held immediately because of the preparation required,
especially as the number of political parties has surged to more
than 100. Only three were allowed during the Soeharto era.
The government expects to hold a general election in the
middle of next year, which will be followed by presidential polls
and the formation of a new Cabinet in December.
Emil said that although the rupiah had managed to stabilize at
about Rp 7,500 to the U.S. dollar lately, compared to around Rp
14,000 in June, it should not be a cause for celebration because
the strengthening of the currency was not followed by a surge in
real sector investment due to worries over the current political
instability.
"What is important is that the strengthening of the currency
has to be beneficial to production activities," he said.
The government claims the strengthening of the currency was
due to increasing confidence in the economic reform programs,
pointing out that despite the recent bloody riots the rupiah had
not weakened.
The stable currency has helped stabilize inflation, which in
November rose 0.08 percent, from a deflation of minus 0.27
percent in October, sparking optimism that the year-end target of
80 percent would not be exceeded.
These positive developments have provided Bank Indonesia with
greater flexibility to further lower the currently crippling high
interest rates. (rei)