Businessmen hail Habibie's speech

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)