Habibie no economic savior, says sennior economist

Habibie no economic savior, says sennior economist

MELBOURNE (Reuters): A senior Indonesian economist said yesterday he doubted the nation's battered economy could recover with new President B.J. Habibie at the helm.

Hadi Soesastro, of the Jakarta-based Centre for Strategic and International Studies, said Habibie lacked the political and moral authority to be more than a caretaker leader.

"It's so difficult to imagine that he would be able to restore confidence," he told reporters in Australia at the launch of a major report on East Asia's economic crisis.

"That's because he was hand-picked by Soeharto and ... doesn't have the political legitimacy."

Former president Soeharto quit last month, answering popular calls for him to end his 32-year reign as the archipelago of 200 million people plunged into political chaos.

Habibie, his vice-president, took over the presidency.

Since then, Habibie has responded to calls for political liberalization by releasing some political prisoners and has signaled elections will be held by the end of 1999.

"I think he's trying very hard, but this government lacks legitimacy -- that's the main problem," Soesastro said.

"Unless the legitimacy is there, this government cannot do much and in fact there's a danger that this government ... would react to popular pressure in order to gain legitimacy.

"So, therefore, there's no clear policy that's coming out. It's going to be reactive. It's coming from all directions. It's something like a free-for-all."

He said Indonesia was unlikely to return to economic growth for four to five years.

Its economy is forecast to shrink between 10 percent, the official figure, and about 20 percent in calendar 1998, he added. Soesastro's Centre for Strategic and International Studies is a privately funded think-tank.