Thu, 15 Jan 1998

Businesspeople vow to back govt reforms

JAKARTA (JP): Indonesian business leaders have pledged their support for any reform measures to be taken by the government to cope with the country's monetary crisis.

"There's no need to blame each other again, we have to be responsible and take part in the restructuring of our economy," Sofyan Wanandi, chairman of the Gemala Group, said after a meeting between Indonesian business leaders and executives of Bank Indonesia, the central bank, Tuesday night.

About 120 local tycoons and leading entrepreneurs met with Bank Indonesia Governor J. Soedradjad Djiwandono to show their support for the revival of the Indonesian economy.

The chairman of the Indonesian Chamber of Commerce and Industry, Aburizal Bakrie, said the chamber wanted to show the government that the private sector would unite in efforts to restore confidence in the Indonesian economy.

Businesspeople said they would back any decision resulting from government talks with the International Monetary Fund (IMF) to reform the economy.

"The business sector waits eagerly for the success of the government in its talks with the IMF," Aburizal said.

President Soeharto is scheduled to meet with IMF managing director Michel Camdessus today, in which Camdessus is expected to finalize further details of the economic reforms.

Camdessus' visit is one of a series of important visits from IMF and American government officials this week to persuade the Indonesian government to stick to economic reforms agreed to in October in exchange for the IMF-arranged bailout program to cope with the country's ailing economy.

IMF first deputy managing director Stanley Fischer arrived in Indonesia earlier this week, followed by U.S. Deputy Treasury Secretary Lawrence Summers.

Indonesia has become the focal point of concerns by the IMF, the United States, and other large countries, after the rupiah crashed last week to over Rp 10,000, an over 70 percent drop in value since July, on concerns that the government might backslide on its commitment to reform measures.

Sofyan said the private sector was waiting for the result of the meeting to see what kind of action plan it would take to support the reforms.

"We are going to use the momentum of the IMF visit to show the unity of the private sector in helping the government cope with the crisis," Sofyan said.

Aburizal said the government needed to clearly disclose what reform measures it would take after talks with Camdessus.

"We need the government to detail the measures to be taken," Aburizal said.

Soedradjad

Soedradjad said Tuesday he received the private sector's support with delight.

"The assessment and willingness of the business sector to support the government and to find a way out of this turmoil will help us not only survive but also improve ourselves," he said.

He said both the government and the business sector would work to restore confidence in the rupiah by encouraging exporters to exchange their dollar holdings for rupiah.

The government would provide new foreign exchange swap facilities for exporting companies to replace existing ones.

"We expect to complete it within one or two days, if technical matters are settled and if owners of the exporting companies approve the new facilities," Soedradjad said.

He said the government had worked with exporters on technical matters of the new facilities.

"But we have to be careful so we aren't accused of subsidizing exporters. We have to come up with a balanced system that is acceptable by international rules and at the same time attractive to the private sector," he said.

Soedradjad said exporters kept their dollar holdings because there was uncertainty in the rupiah. Companies had to have dollars to import some materials and repay their foreign loans.

He said existing swap facilities for exporters were not attractive enough so exporters still preferred to hold on to their dollars.

Indonesia's imports were about US$3.7 billion a month, he said.

Soedradjad estimated the value of transactions in the foreign exchange market totaled about $8 billion a day.

Because there was a slowdown in the flow of dollars, and exporters were still holding on to their dollars, the value of transactions was declining, he said.

Asked why the rupiah continued to sink despite the "love rupiah" campaign that was recently launched, Soedradjad said the campaign was a morale movement.

"In market reality, it may not have any significant impact, because even if the rupiah strengthens here, it may fall in the London and New York markets," he said.

"This movement is symbolic to show that we are in this together, but if we all do this together, there may be improvement," he said.

Business and government leaders and public figures have been endorsing the "love rupiah" campaign by publicly exchanging a large amount of dollars for rupiah at local banks this week.

Soedradjad said there was no need to continuously question the drop of the rupiah. "It's like people who keep asking you what grade you are in at school every month, when they know that you are still in the same grade."

Sofyan contributed the rupiah's wild fluctuation to speculation on the ongoing negotiations between the IMF and the government.

"I believe once there is a clear outcome of the meeting, the rupiah will regain strength, especially after the market sees the commitment of the IMF and other large countries to help us," he said.

Tuesday night's meeting was attended by owner and founder of the Salim Group Lim Sioe Liong, property mogul Ciputra, father and son tycoons Mochtar and James T. Riadi of the Lippo Group, and Prayogo Pangestu of the Barito Group. (das)