Contentious issues 'dog IMF talks'

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)