Tue, 13 Jan 1998

Economic reforms

While Mr. Stanley Fischer and Lawrence Summers from the U.S. Treasury Department are here to discuss reform with the Indonesian government leaders, let us hope that they will not overlook the reforms needed in the world of every day commerce in Indonesia. Indonesia's economic and political stability will be effected not only by macro economics but by the health of the day-to-day marketplace. In the last weeks as the rupiah lost more of its value, businesses and shops from the smallest retailers to the largest dealers raised their prices another twenty-five to thirty percent. When the rupiah settles at 7,000 or 5,000 or 4,000 to the dollar, will there be a corresponding rollback of the price increases imposed when the rupiah reached Rp 10,000 per dollar last week? Without official intervention, it is hard to imagine shopkeepers adding yet another generation of price stickers, this time with lower prices, to their goods.

While we all appreciate the need to increase prices to reflect the higher price of imported goods, consumers also understand the difference between legitimate increases and the profiteering that has gone in the last months. Not a few vendors have used the currency crisis as an opportunity to inflate the prices of everything. Increases were applied to imported goods but also to goods made locally from local materials, which often had been on the shelves for months. Yes, if local products are made with imported machinery, all products will ultimately be affected by the rupiah's depreciation. But is it legitimate or just for vendors to raise prices across the board as much as many have done?

If Indonesia's commercial practices are not soon examined and included in the reforms that are undertaken, stability will elude the government. It behooves those working to stabilize Indonesia via economic reform to include commercial reform in their agenda quickly.

DONNA K. WOODWARD

Medan, North Sumatra