Fewer deregulatory measures expected ahead of elections

Fewer deregulatory measures expected ahead of elections

JAKARTA (JP): The government is unlikely to go on a
deregulation spree in the next two years because it will be
preoccupied with the May 1997 general election and its political
agenda, economist Mari Pangestu predicts.

"I do not expect many deregulation packages with significant
impacts on the business sector within the next two years," said
Mari from the Centre for Strategic and International Studies
(CSIS) on Friday.

She told a seminar on short and medium-term economic prospects
that it was unlikely that policy makers would initiate many
economic reforms.

"The policy makers will prefer to play it safe," she said.

Mari said the government would be cautious on introducing
deregulatory reforms which might have unexpected consequences
before the general election.

She said it was unlikely that the general election would
impact significantly on the business climate or economic growth
because the outcome of the balloting would mirror the previous
election.

Indonesians go to the polls on May 29 to elect their
legislators who will elect a new President in March 1998.

If there were any significant impacts on the domestic economy
they would most likely be caused by external factors such as a
world recession or declining oil prices, Mari observed.

Mari said the election would run smoothly because its outcome
was predictable.

"To the business community, 1998 will be much more important
because of the formation of a new cabinet in late March," she was
quoted by Antara as saying.

Mari said rumors on the makeup of the next cabinet would be
more important to businesspeople than the question of the next
president and vice president.

Mari predicted there would be no major changes in the economy
before 1998. This would be welcomed by those who have benefited
greatly from the present state of affairs of business but it
would irk those who had suffered from the high cost economy.

Mari predicted slower economic growth (7.5 percent) this year
but invigorated economic growth in 1997 and 1998.

"The growth will remain high next year because the country's
external environment will improve and the investment boom will
start to bear fruit," she said.

She projected the growth would mainly come from construction,
financial services, trade, hotel and restaurant industries.

The construction sector is expected to grow 15 percent next
year, up from 11 percent this year; financial services by 10.5
percent, up from 10 percent; and trade, hotels and restaurants by
7.5 percent, up from 7.3 percent, she said.

Agricultural growth is expected to slow to 2.9 percent next
year, down from 3 percent; manufacturing is expected to decline
to 10.8 percent from 11 percent; electricity, gas and clean water
should drop to 13.5 percent from 14.5 percent; the mining sector
is predicted to remain flat at 5 percent, she said.

"All my projections are based on the assumption that the
government will continue to make correct policies. And I do
believe that the government will do it," she said.

The government's policy consistency was tainted this year when
it introduced a controversial national car policy and imposed
tariff protection on the upstream petrochemical products,
polyethylene and polypropylene.(jsk)