Economists call for more concrete efforts to restore confidence
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)