Govt acts to enforce reforms

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)