Economists hail policy to boost private sector's role

Economists hail policy to boost private sector's role

JAKARTA (JP): Experts have hailed the government's policy
initiative to give the private sector a greater role in the
recovery of the country's economy, saying the move would
encourage greater investment.

However, they also warned that there were still many problems
hampering the business sector.

"With this policy, the government is going in the right
direction," economist Djisman Simandjuntak of Prasetya Mulia told
The Jakarta Post on Saturday.

"The policy should make doing business more attractive and
should boost both domestic and foreign investment," added Dibyo
Prabowo, an economist at Gadjah Mada University.

President Megawati Soekarnoputri stressed the crucial role of
the private sector in helping the economy recover during her
speech at the House of Representatives plenary session on Friday
when unveiling the 2002 state budget draft. The draft budget cut
government spending, with a huge amount of the budget allocated
to servicing overseas and domestic debts.

"The recovery of our national economy will become an initial
step to creating jobs and alleviating poverty. It must be
admitted that the realization of these objectives will mainly be
determined by the role of the private sector," Megawati said.

Economists said that the conservative 2002 budget could not be
expected to make a major contribution to the targeted 5 percent
economic growth, thus the private sector should play a greater
role by increasing exports and investment.

Stronger investment and export performance should also bode
well with the government prioritizing the creation of more job
opportunities for the millions of Indonesians left unemployed in
the wake of the mid-1997 economic crisis.

The economists warned, however, that lingering security
problems and weak law enforcement may force the private sector to
withhold investment.

"The government should address security problems and poor law
enforcement if it wants to count on the private sector for
economic growth," Dibyo said.

He also urged the government to simplify procedures in order
to help boost exports, particularly with exporters expected to
face tougher times amid an economic slowdown in developed
countries.

"Export procedures and requirements are still too lengthy and
complicated," he said.

Djisman called on the government to eliminate investment
barriers, which had grown consistently as reflected by the
increasing volume of capital goods imported over the past two
years.

He also said that immediate action must be taken by the
government to accelerate the restructuring of corporate debts to
help local companies resume operations.

Experts have said that, unless the corporate debt problem is
resolved, banks would continue to be reluctant to resume lending
to the business sector.

Meanwhile, businessman Djimanto, who is also an executive at
the Indonesian Employers Association (Apindo), called on the
government to immediately take action against excessive
implementation of the regional autonomy policy because many
regional administrations had issued new rulings implementing
taxes and duties, thus creating significant burdens for
businesses.

Djimanto said the new regional taxes were basically levies
which drove costs up and cut sales, making it very difficult for
companies to operate.

"Those regulations are proof that the country's bureaucrats
and lawmakers have no sense of business," he said.

Previously, the Indonesian Chambers of Commerce and Industry
(KADIN) also voiced similar concerns, pointing out that there
were over 1,000 regional rulings which had seriously hampered
investment.

Elsewhere, Djisman dismissed fears that the planned increase
in fuel and electricity prices would curb investment, saying the
prices of fuel and electricity in Indonesia were still the lowest
in the world.

Megawati said in her budget speech that fuel prices would be
raised by an average of 30 percent, possibly in January, as a
consequence of the governments plan to further reduce the fuel
subsidy and hence reduce pressure on the state budget.(03)