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.