Government's cutback measure 'not enough'

JAKARTA (JP): Economist Djisman S. Simanjuntak said yesterday the government's retrenchment program was good in terms of cost saving but further measures were needed.

"It is a good move, but it is not good enough. The most important thing is to reduce the consumption of imported products to curb the growth in the current account deficit."

In addition, household consumption on imported products should be lowered," said Djisman of the Institut Prasetia Mulia (IPM) management school.

"It is also important to increase exports and productivity," Djisman said on the sidelines of a business forum held by Bank Bumi Putera.

Yogyakarta's Gadjah Mada University economist Tony Prasetiantono said the rescheduling of some big projects would improve the macro economy.

"Of course the government's move will have some risks like slower economic growth and unemployment... but it is good," Tony said as quoted by Antara.

The government announced last week that it would postpone or review government and related projects worth US$38 billion to cope with the sharp drop in the rupiah against the U.S. dollar.

The rupiah and other Southeast Asian currencies have been under attack following the devaluation of the Thai baht in early July. The rupiah has depreciated by about 20 percent against the U.S. dollar since then.

Djisman estimated that economic growth would grow by only about 5 percent this year as a result of the cutback measures as compared to 7.8 percent last year.

He said that investment would grow by 7 percent or 8 percent this year, down from 11 percent last year.

Miranda S Goeltom, an economist and expert at the office of the Coordinating Minister for Finance and Development Supervision also hailed the government's rescheduling measure.

But she urged the government to improve information transparency to the public. Goeltom said the recent currency crisis was partly caused by a lack of information.

"The government should tell the public what sectors to deregulate... and what action to take. This is aimed at increasing information transparency to the public," she said.

Otherwise, she said, the public would continue to use speculative practices due to the lack of information on steps taken by the government. (aly)