Ginandjar hails proposal for more liberal economy

JAKARTA (JP): State Minister of National Development Planning Ginandjar Kartasasmita said yesterday that all forms of economic protection and monopolies should be eliminated and replaced with an open market mechanism to achieve sound development.

"Development policies should have a clear impact on economic development, thus efficiency must be continuously improved to enable us to reach the economic growth target of 7.1 percent a year during this sixth Five Year Development Plan (Repelita VI) period," he told reporters during a hearing with Commission X of the House of Representatives.

Ginandjar was responding to a statement of senior economist Sumitro Djojohadikusumo, who criticized the country's economy as being inefficient on Wednesday night.

Sumitro said the inefficiency was mainly caused by the widespread practice of protectionism and monopolization, which in turn reduces the amount of capital investment needed to generate one unit of output, known as the incremental capital output ratio.

Ginandjar, who said he had not yet read Sumitro's statement in the mass media, asserted that basically practices of providing protection and monopolies to businesses were "not the intention of the government".

To anticipate a more liberal world market, he said, all forms of protection would be gradually eliminated before the year 2003. Without such elimination, stable economic growth would be difficult to achieve.

Ginandjar acknowledged, however, that the current level of protectionism had not yet burdened the nation's economy, pointing out that Indonesia's incremental capital output ratio continued to decline during the Repelita V period, which ended in April 1994.

"Indonesia's incremental capital output ratio during the Repelita V period was only 3.9, lower than 4.4 estimated by the plan. This shows that the national economy is becoming increasingly efficient," he said.

Ginandjar, who is also chairman of the National Development Planning Board (Bappenas), said his office would make a stricter selection policy for the projects proposed to his office, with efficiency being the main requirement to gain approval.

Nuclear

During yesterday's hearing with the commission, which oversees environmental, science and technology and development planning affairs, Ginandjar said the plan to use nuclear technology for power generation could be canceled if necessary.

"I fully agree that there should be a public dialog before making a decision on whether or not we should use nuclear for power generation," he said.

"Although the government may have a good argument (to use nuclear), if there is better reasoning from the people, why not?" he asked, adding that such a dialog could bring up new ideas and alternatives.

He said that a public dialog should be conducted while no decision has been made.

The issue of nuclear technology was raised by legislator Laksmiari Priyonggo, who questioned the role of the planning board in a nuclear project.

The plan to construct a nuclear power plant in Central Java has caused wide debate in the public, with environmentalists skeptical about its safety.

The government, however, has continued preliminary and feasibility studies for the project but has yet to conduct safety surveys.

Ginandjar yesterday acknowledged the importance of nuclear technology, saying it was the "technology of the future" and that it was more environmentally-friendly compared to other technologies.

For Java, he said, the use of coal for power generators was restricted by a certain tolerable limit.

"But the question of when exactly nuclear technology should be applied is a different matter which needs thorough studies," he said. (pwn)