EC vice president confident about RI's prospects

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)