Business leaders support CBS plan

JAKARTA (JP): Prominent business leaders in the People's Consultative Assembly expressed support yesterday for President Soeharto's effort to stabilize the rupiah through a currency board system.

The Assembly members, however, noted that the planned measure would require an overhaul in the economic system as well as vast funds.

Assembly member Probosutedjo of the Golkar faction questioned the government's financial capability to set up a currency board system (CBS).

"Setting up a CBS needs much funds, where will that come from?" asked Probosutedjo, who is Soeharto's half-brother. "The government doesn't have the funds, and the IMF hasn't agreed to the plan."

He said the International Monetary Fund (IMF) had yet to disburse the total amount of its US$43 billion bailout package to help restore Indonesia's ailing economy.

"Meanwhile, the only way the CBS can be carried out is with the IMF's funds," said Probosutedjo, who is president of the Mercu Buana group of companies.

A currency board system is a monetary regime based on an explicit legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate.

In his accountability speech before the 1,000 members of the People's Consultative Assembly yesterday, Soeharto mentioned the possibility of setting up a CBS system with adjustments that were acceptable to the IMF. He called the concept "IMF-Plus".

Thomas Suyatno of Golkar said certain precautions must be taken before the government decided to fix the exchange rate.

Thomas, who is also chairman of the advisory board of the National Private Banks Association, said an IMF-Plus concept which aimed to peg the rupiah's exchange rate to the U.S. dollar was realistic.

However, the government must ensure solid ground for the move, including bringing about banking reforms and the rollover of maturing private companies' offshore debts, estimated to stand at $30.12 billion, before implementing the system.

"If these criteria are not fulfilled, the efforts to peg the rupiah will fail," he said.

Other Assembly members from the business sector expressed full support of the CBS plan, saying it would complement the existing IMF economic reform package.

"The IMF package (alone) hasn't helped the country recover from the monetary turmoil," Tanri Abeng said.

On the contrary, the condition has worsened since the package was agreed upon, said Tanri, one of the three members of the Economic and Monetary Resilience Council headed by Soeharto.

"I do not think the IMF (reform package) and the CBS contradict each other. In fact, the two complement each other," he said.

"With the IMF-Plus, we will not be solely reliant on assistance from international institutions," he added.

The chairman of the Indonesian Chamber of Commerce and Industry, Aburizal Bakrie, hailed the IMF-Plus concept, saying it was a compromise between the wishes of the government and those of the IMF.

Aburizal, better known as Ical, said the country needed funds from the IMF, but the international body should also take notice of the aspirations of the Indonesian people.

"IMF-Plus means we are seeking to compromise, this will have a positive impact for us," he said.

He said he was sure the proposed concept would strengthen the rupiah because it would show Indonesia's will to cope with the crisis. (das)