Budget must promote growth: Businesspeople

Budget must promote growth: Businesspeople

JAKARTA (JP): The nation's business leaders are still hopeful
the government will find ways of reviving the embattled economy
through its 1998/1999 budget.

The Jakarta Post polled several of them on what they expect
and hope to hear when President Soeharto presents the draft
budget Tuesday night.

Aburizal Bakrie, chairman of the Indonesian Chamber of
Commerce and Industry:

We are relieved to hear that President Soeharto said the next
state budget would increase in size. That's important, no matter
how much the increase. Second, the President stressed that the
budget would still observe the balanced budget principles. Thus,
there would be no more target of achieving a surplus of 1
percent of the country's gross domestic product.

Taking 1 percent of the GDP surplus is really not necessary,
especially when the economy is going downhill. It would be better
to use the surplus to finance the government's development
spending, rather than keep it in the state treasury's account.

Government revenues in 1998/1999 from domestic taxes
will likely drop, even in rupiah terms. Some spending
allocations, however, would have to go up, including routine
spending, development spending and subsidies.

We hope the government will not reduce subsidies, especially
fuel subsidies, in the budget.

Angky Camaro, vice president of PT Indomobil Sukses
Internasional, the country's second largest automobile company:

We don't expect the budget to increase in dollar terms. It
will definitely fall, as no significant income is derived in
dollars -- almost all the income is in rupiah.

In rupiah terms, yes, it might increase.

Anyway, an increase or decrease in the state budget will not
affect our business very much, as our expansion and performance
depend largely on a free market. Well, some sales might be
derived from state budget spending, but these are very small.

But my concern is not the size of the budget, nor the type of
spending, but more about market liquidity. So if rupiah liquidity
remains tight, sales of our automobiles would lag. If they ease
their grip on liquidity, our sales will pick up.

Pontjo Sutowo, a hotelier and chairman of Indonesian Hotel and
Restaurant Association:

The budget has to ensure the development process continues.

It should focus more on sectors which have contributed
relatively large foreign exchange earnings to our country, such
as tourism and agribusiness.

The state budget should not, in any way, help drive some
companies into a state of collapse. Instead, it should prevent
corporate bankruptcy.

Besides, the budget has to help maintain our economic
stability through providing assistance to small businesses and
preserving traditional markets, among other things.

Nyoman Moena, head of the supervisory board of the Federation
of Domestic Private Banks:

I think the budget will be as tight as the current budget, or
even tighter. Domestic revenues will decline, and therefore the
budget's drive for overall economic growth would weaken; its
drive for equality would be less.

Everybody hopes the budget can appease all concerns, and
therefore restore public confidence in the government and
economy. But I question this. I think the announcement of the
state budget will be just like the announcements of deregulations
late last year, which failed to impress the market.

I think what will really turn everything around, or at least
help restore market confidence, is certainty in the country's
leadership and the cabinet lineup. After the president and vice
president are elected and after members of cabinet are selected,
we can hope for the recovery to come.

I would like to warn everybody to be more cautious about
possibly spreading rumors on President Soeharto's health, or
anything else related to him, considering the President will
deliver the state budget speech in the evening, rather than in
the morning as usual. Delivering a speech in the evening should
be no problem at all, but people, especially speculators, can
create stories from any event to get as much profit as possible.
We should anticipate this.

Harry Rachmadi, president of Bank IFI:

I hope the government will become more proactive instead of
simply being defensive through the new budget. I hope the
government will be capable of handling the problems.

I'm not sure whether the budget will address deregulation
measures, but I hope it will also include efforts to cut the
high-cost economy.

I expect the government will also focus on labor-intensive and
export-oriented industries. We know the unemployment line will
grow longer in this crisis.

The government must also show greater consistency. There are
indications that several projects it shelved (last September in
response to the crisis) have been reactivated.

I hope President Soeharto will remain healthy. We need a
leader who is very capable, who really understands what's going
on, who is able to manage the nation with such huge problems.

P.S. Siswoputranto, executive director of the Indonesian Cocoa
Association:

I hope the budget will refocus on agribusiness because this is
a natural resource-based sector.

Agribusiness is one of the biggest providers of foreign
exchange earnings. Exports of agricultural products generate
dollars, while costs are in rupiah.

Agribusiness seems to have been forgotten in the past state
budgets because the government has put more spending emphasis on
industrial sectors.

Last year, agribusiness suffered a great loss due to the
severe drought caused by El Nio. The government should allocate
more money to help our commodities recover from the drought.

Benny Subianto, president of PT Astra Agro Lestari:

If the government wants to see private companies flourish, it
is now time to move forward through the next state budget.

Given the current monetary crisis, the government should push
ahead with projects which benefit the most people. I think the
government knows exactly what projects to go ahead with, and
those which should be postponed.

I do not know what sectors should be prioritized and what
sectors should not. One thing is clear: the government should
work based on its competence and ability. That's all.

Mas Achmad Daniri, a director of the Jakarta Stock Exchange:

I think the budget should maintain the sustainability of the
economic activities.

This means that not all projects should be cut, but the
government should carefully select which projects to halt and
which should proceed.

There should be a special allocation of expenditure to move
the economy forward. Unless the government gives more development
spending allocations, our economy will slow down further.

But I understand it is difficult to go ahead amid this
difficult situation because there will not be enough revenues to
drive all forward.

I understand that both the government and private sectors are
facing liquidity problems. So it is important to ease the
liquidity first before going ahead with new projects.