Govt acts to enforce reforms

JAKARTA (JP): The government acted yesterday to enforce several reforms agreed with the International Monetary Fund last week by issuing a series of decrees and rules formalizing the measures.

The government will also present the revised 1998/1999 draft state budget based on the new reform package to the House of Representatives tomorrow, Minister of Finance Mar'ie Muhammad said yesterday.

Mar'ie said he was ordered by Soeharto to represent him in unveiling the amended budget to the House.

"I need to emphasize that the revised budget will remain balanced and dynamic, there is no change at all to the principles," Mar'ie said after attending an economic meeting chaired by Soeharto at the President's Bina Graha office.

The President presided over the first meeting of the Economic and Monetary Resilience Council yesterday to finalize the revised budget and to follow up on the Jan. 15 reform package.

The council is chaired by Soeharto with economic advisor Widjojo Nitisastro acting as secretary-general and Director General of Tax Fuad Bawazier as Widjojo's deputy.

Its members include former economic minister Radius Prawiro, chairman of the Federation of Private Domestic Banks A. Subowo and president of PT Bakrie & Brothers Tanri Abeng.

Seven ministers, including the minister of finance and Minister/State Secretary Moerdiono and Minister for National Development Planning Ginandjar Kartasasmita , were appointed ex officio members.

The revised draft state budget, which will come into effect April 1, envisages zero economic growth, 20 percent inflation and an average rate of Rp 5,000 to the American dollar.

"But we will do our best to achieve some degree of economic growth by boosting rupiah spendings to generate jobs and invigorate the domestic market demand," Mar'ie said.

"The President has signed seven presidential decrees, six presidential instructions and three government regulations to enforce several points of the reform," Minister of Industry and Trade Tunky Ariwibowo said yesterday.

Presidential Decree No. 20 revokes the exemptions of import duty, value added tax and luxury sales tax on the national car (Timor) and Presidential Decree No. 21 abolishes the clove monopoly of BPPC and dismantles the agency. Both the monopoly agency and the national Timor car project are controlled by Soeharto's youngest son, Hutomo Mandala Putra.

Presidential Decree No. 22 liberalizes the import of new and used merchant and fishing vessels without prior permit from the government.

Government Regulation No. 14 exempts the luxury sales tax from locally-assembled automobiles with a minimum local content of 60 percent, Government Regulation No.15 allows industrial foreign- investment enterprises to sell their products in the retail market. Government Regulation No. 16 allows foreign trading companies to operate in retail trade.

Presidential Instruction No. 3 bans state aircraft manufacturer IPTN, headed by B. J. Habibie, from receiving funds from the state and from obtaining government-guaranteed loans and Presidential Instruction No.4 revokes the local-content rule on dairy (milk) products.

Presidential Instruction No. 5 revokes the obligation of farmers in particular areas in Java to grow sugar cane and Presidential Instruction No. 6 frees foreign investment in oil palm plantations.

Other rules issued yesterday grants full autonomy to the central bank, frees plywood producers and makers of other wood products to deal directly with foreign buyers and export their products without going through their trade associations, bans the collection of levies on exports, free trading and movement of farm products across districts and provinces and restrict the trading monopoly of the State Logistics Agency to only rice.

Meanwhile, Mar'ie told foreign correspondents last night, the government was committed to helping private companies settle their offshore debts.

The government would do its best to help the special team headed by former economics minister Radius Prawiro to resolve the offshore corporate debts, which reportedly stood at about US$65 billion as of last September.

"The government will not sit still through this problem, we will help the team with its task," Mar'ie said,

Mar'ie said the foreign debt of Indonesian businesses was complex and hard to manage as it dealt directly with foreign creditors.

"Unlike South Korea, where loans were channeled through banks, the offshore debt here is less transparent although the amount is less than that of the Korean private sector," he said.

Mar'ie, Tunky and Widjojo briefed foreign journalists last night on the government's latest measures and decrees to implement the economic reforms agreed with the IMF last week.

At the media briefing, Widjojo dismissed the idea that issues related to the presidential election had triggered the collapse of the rupiah against the U.S. dollar in the past two days.

"The ups and downs of a currency depend on many things. It is wrong to link the sharp fluctuation to only one factor," he said. (prb/das)