Contentious issues 'dog IMF talks'

BANDUNG (JP): The controversial national car program, a jet airplane project and a state agency's trading monopoly on food products are possibly slowing down talks with the International Monetary Fund (IMF) for financial aid, economist Sjahrir said.

Speaking at a seminar here Saturday, Sjahrir predicted that the government would strenuously defend all three programs to sustain the country's industrialization process and secure food supplies at fairly stable prices.

"The government will persistently argue that the national car is Indonesia's internal matter. Besides, it is pursued in line with its financial capability," Sjahrir said.

Minister of Industry and Trade Tunky Ariwibowo confirmed earlier last week that the negotiations with the IMF covered specific issues, including the national car program.

But he reiterated that the government was committed to continuing the car program, which granted three-year tax and duty breaks to PT Timor Putra National to manufacture sedans in cooperation with South Korea's ailing Kia Motors Corp.

On the jet project, Sjahrir predicted that the government would also defend it as it had made the program one of its top priorities in its development program.

The government is fully supportive on the N-2130 jet project by Bandung based state-owned aircraft manufacturer PT Industri Pesawat Terbang Nusantara.

The government set up a company called PT Dua Satu Tiga Puluh last February to raise funds of up to US$2 billion to finance the development of the passenger jet.

Sjahrir predicted that the government would also maintain Bulog's trading monopoly on some agriculture products, especially rice, to ensure that those commodities would be made available to all Indonesians at relatively stable prices.

"Nevertheless, those three issues will possibly remain contentious during the current negotiations," Sjahrir said.

Negotiations have proven to be tough and could not produce any tangible results by the weekend although Minister/State Secretary Moerdiono said earlier that the outcome of the talks would be known over the weekend.

Sources in Jakarta said Indonesian and IMF officials met again on Saturday to wrap up details of a financial assistance package to bail the country out of the current monetary crisis.

Syahrir said there would be three scenarios on the possible outcome of the IMF-Indonesia negotiations.

The first scenario would be that the IMF would agree on financial assistance without any conditions attached to it.

"Even with this scenario, we need at least one year to recover from this crisis," Syahrir said.

The second scenario would be that the IMF would disburse its financial aid to Indonesia with some conditions.

The last scenario would be that the negotiations would not reach any agreement.

But Syahrir ruled out the third scenario as highly unlikely because the IMF seems to be interested in reaching a suitable solution.

"Indonesia has built up a remarkably good record of servicing its foreign debts on time for 31 years," Sjahrir said.

Besides, the Indonesian team of negotiations was led by reliable, highly respected negotiator Widjojo Nitisastro, according to Sjahrir.

If the worst-case scenario did happen, Indonesia would face more troubles, especially in paying its short-term debts, which will reach $10 billion in December and $15 billion in March, Sjahrir added.

If the negotiations fail, the crisis could also be prolonged forcing more people into unemployment, he cautioned.

"I have received a report from the Indonesian Real Estate Association, saying that 40,000 employees have lost their jobs in the property sector," he said. (08/43)