Economic reforms

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