Businessmen hail Habibie's speech
JAKARTA (JP): Local businessmen hailed the four-point economic stabilization and reform program delivered by President B.J. Habibie in his first state of the nation address at the House of Representatives Saturday.
But they said more concrete action was needed to regain the hard-to-obtain confidence in the shattered economy.
Indonesian Chamber of Commerce and Industry (Kadin) chairman Aburizal Bakrie said Habibie's economic measures to revive confidence in the economy were very clear.
"I'm sure that they will soon create a better investment climate in Indonesia," he said.
Habibie said in his speech that restoring confidence was the key to lifting the country out of its worst crisis in three decades.
Although confidence and support from overseas governments and institutions had been strong as reflected from the US$14 billion in international aid committed for the current fiscal year, private investor confidence had yet to return, he said.
"I hope that domestic investors will play a role in the return of private investment," he said, pointing out that if confidence was restored, the rupiah's exchange rate would settle at a more suitable level, which would ease the pressure on prices and inflation and finally lower interest rates to regenerate the real sector.
Habibie, who came to power on May 21, explained that his top priority was to restore confidence by reviving the battered- banking sector.
Other priorities are the resolution of the private sector's overseas debt, creating an efficient and competitive economy by abolishing monopolies and promoting good and clean governance by fighting corruption, collusion and nepotism, he added.
"The financial sector must first be revived, otherwise the real sector cannot grow, as there will be no fresh money circulating," Aburizal said when asked to comment on Habibie's first priority in economic reform.
He, however, said the government must take concrete measures to regain investor confidence in the economy, including by guaranteeing safety in the business sector and eradicating various illegal fees and excessive bureaucracy.
Many Chinese-Indonesian businesspeople have left the country with their capital since the May 14 political unrest, in which there was widespread looting of properties belonging to the ethnic group.
Security troops were seen patrolling the capital last week amid rumors that unrest would reoccur on Independence Day yesterday.
If the rupiah fails to regain ground and remains at its current level of Rp 13,000 to the U.S. dollar, almost half of the population could slide into poverty and inflation could reach triple digits. The rupiah traded at 2,400 to the dollar in precrisis days.
Thomas Darmawan, chairman of the Indonesian Food and Beverages Association, said that providing security for businesspeople was essential to regain confidence.
"If the country was completely safe, confidence in the domestic business sector would return and prompt foreign investment to reenter the country," he said.
Political rhetoric
Economist Rizal Ramli, however, lambasted Habibie's speech as mere political rhetoric to win popular support for his administration.
"Habibie said that he's against corruption, collusion and nepotism, but he presented the country's highest honor to Mrs. Habibie and his brother. This is clearly a nepotistic practice," he said.
Habibie conferred the Bintang Republik Indonesia medal on his wife Hasri Ainun Besari, six ministers and one former minister on Friday.
Rizal also found Habibie's anticorruption stance questionable because of his failure to bring corrupt officials during the Soeharto regime to court.
"Habibie's economic stabilization measures aren't clear," he said, pointing out that his fiscal policy was contradictory to his monetary policy.
"In a stabilization program, synchronizing the fiscal and monetary policies is the most important thing," he said.
Habibie said the high interest rate regime would have to be maintained to curb inflation, but huge subsidies were needed to help the poor in surviving the year-long economic crisis.
A group of 15 economist recently criticized the huge subsidies which have caused a large deficit in the 1998/1999 fiscal budget of up to 8.5 percent of gross domestic product.
They said it was a mere populist policy which would lead to an uncontrollable inflation rate.
Minister of Cooperatives and Small Enterprises Adi Sasono said on the weekend that the huge subsidies were needed because citizens were getting hungry.
Habibie welcomed criticism of his policies, but said: "It would be better if the contribution of ideas was communicated in a manner of full of wisdom, lest it should cause confusion or even dissension in the community." (rei)