Economists call for more concrete efforts to restore confidence

JAKARTA (JP): The loss of people's confidence in the government which has worsened the monetary crisis has to be restored by revamping the current government, economists said yesterday.

Senior economist and former cabinet minister Mohamad Sadli said the monetary crisis, which has rapidly deteriorated in the past few days, showed that the market had lost confidence in the existing government.

"The local and foreign markets have cast a vote of no- confidence in Indonesia," he said, adding that the rupiah dipping to 10,000 against the U.S. dollar yesterday was an indication.

He said the rupiah's sharp fall after President Soeharto's speech on the 1998/1999 draft budget Tuesday evening indicated that the fall was not only caused by economic reasons, but also political sentiment.

"The (existing) government must be replaced," Sadli said on the sidelines of a seminar on crude palm oil organized by the Yayasan Indonesia Forum.

He was referring to the president and his ministers.

But Sadli noted that under the country's constitution, the president can only be replaced at a People's Consultative Assembly meeting, while the replacement of ministers could take place at any time.

The assembly will convene in March to elect the president and vice president.

Sadli said political reforms were not enough to solve the monetary crisis but it could serve as a starting point for an economic recovery in the long-term.

"Thailand and South Korea had made political reforms but they were still in a crisis," he said.

"Aside from political reforms, the end of the crisis in the region depends on the perception of foreign investors in the region," he added.

Economists Rino Agung Effendi, Rizal Ramli and Subarto Zaini shared the view that financial and economic reforms would not bear any fruit if people's confidence in the government was not restored.

"A complete economic reform package will not have any impact now if the government does not have any credibility at all," said Rino, chief economist at Danareksa Sekuritas.

"The government should regain public confidence first before it launches economic and political reforms," he said.

Rizal Ramli, a director at the Econit advisory group, agreed and said the government had to restore its credibility because the policy makers were no longer credible.

"Our economy has been stagnant over the past four months. It is irrational. People are just waiting for March (when the People's Consultative Assembly convenes to choose a president and vice president)," Rizal said.

The perfect moment was the draft-state budget announced Tuesday.

But the government did not take the opportunity. The 32 percent increase in the proposed budget was unrealistic. There was no mention of any sacrifice to be made by the government from the lowest to the top level.

Subarto Zaini, executive director of the Center for Corporate Leadership, said no single government could stand "to ride the tide when the tide comes".

"And the tide has come. There are no longer any choices available on how to mend the situation now," he said. (jsk/das/rid)