EC vice president confident about RI's prospects

JAKARTA (JP): European Commission vice president Leon Brittan said on Monday he was upbeat about ailing Indonesia's future if it followed prescriptions for a return to economic health.

Brittan believed Indonesia and other crisis-hit Asian countries would be able to weather the economic turmoil.

"I have full confidence in the ability of Indonesia, and indeed Asia more widely, to bounce back from current difficulties and resume strong growth," he said at a business luncheon in which he launched the European-Indonesian Association.

Brittan, who arrived here on Sunday for a two-day visit, said Asia can take off again with sound fundamentals, a highly qualified workforce and well developed infrastructure.

"But this will crucially depend on the policies adopted by their governments."

He said good government policies were required for Indonesia and other countries in Asia to return to the strong economic growth enjoyed in recent decades.

Asian countries need to introduce new regulations to improve the transparency, predictability and accountability of domestic financial systems and the institutions operating within them, he said in his speech.

Brittan lauded Indonesia's new bankruptcy law, antimonopoly law and banking reforms that were created in line with stipulations of the International Monetary Fund.

He met President B.J. Habibie and Minister of Industry and Trade Rahardi Ramelan to promote a new round of world trade talks at the end of 1999 under the auspices of the World Trade Organization.

However, he spent less than five minutes at the news conference after the business lunch due to a sudden schedule change.

Brittan was to depart for India early Monday afternoon, the next destination on his Asian tour which also includes Malaysia and Pakistan.

EU officials said the four countries played influential roles in promoting developing nations' interests in previous economic and trade talks.

According to a report of the European-Indonesian Association, Indonesian exports to the EU-member countries increased by 10 percent in 1998 in value terms despite the prolonged economic crisis that began the previous year.

"Crisis or not, Indonesian exports to Europe are still in the double-digit growth segment, as they have been throughout this decade," the report said.

The increase, the report said, implies a significant increase in volume of goods, taking into account the devaluation of the rupiah against European currencies.

The report said the crisis has meant a shift in the sectoral composition of Indonesian exports, making pulp and paper, electrical goods and miscellaneous manufacturing the strong categories.

In the agricultural sector, palm oil, cacao and coffee experienced a decline in export revenue. In the manufacturing sector, footwear declined by almost a third in the past year and textiles are under pressure as production is reportedly relocated to other countries.

Indonesia's exports have shifted from predominantly agricultural products and raw materials in the early 1990s to mainly manufacturing in recent years, the report said in quoting the EU's statistics office EuroStat.

Exports are not equally spread among European countries. Major Indonesian export destinations are Germany and Britain, the report said.

Imports from the EU, the report said, decreased more than half from the precrisis level in value terms. Imports are down in all sectors and across all member states.

Least affected by the crisis were imports from Germany that declined by 35 percent as of October 1998 compared to the precrisis level. Imports from Spain, France and Italy were the worst affected, hit by a more than 75 percent slump. (02)