Inconsistent policies
The government's policy decision to slap a 5 percent tax on foreign exchange purchases has been aborted. It was (Minister of Finance) Fuad Bawazier himself who last Friday announced the short-lived policy to the public. Yesterday (Monday), even before the decision could be implemented, Fuad announced its cancellation, without going into more detail concerning the reasons for this step. One could surmise that it was due to objections raised by the International Monetary Fund.
Ever since we called on the IMF to help us get out of the monetary crisis, the most conspicuous attitude displayed on our side has been our inconsistency. And, because of this inconsistency, we have tarnished our own image. So bad has been Indonesia's inconsistency that it has already taken more than four months for us to talk with the IMF. Now, an IMF team is in Jakarta to renegotiate almost everything, despite the fact that on Jan. 15 a 50-point agreement was signed by President Soeharto and IMF Executive Director Michel Camdessus.
While these talks were still taking place, we suddenly came out with a decision that startled the IMF. This indicates that we have no grasp of the essential nature of negotiation and agreement. Indonesia's conflict with the IMF actually stems from differing perceptions regarding the market economy. When we signed the agreement, the IMF assumed we were accepting the market economy. What so surprised the IMF was that our understanding was that the market economy should serve the monopolies.
In our argument, monopolies should be maintained since they control commodities which are essential for the masses. IMF officials, however, could not accept that monopolies which control goods and services essential for the sustainment of people's lives should be placed in private hands.
At this stage, we lack a tradition that acknowledges the rules and the reign of the market. Instead, we tend to regard market sentiments as a threat to our sovereignty. So long as economic management that tends to ignore the market remains one of our persistent characteristics, our policies will continue to tarnish our image. The world will continue to laugh at our capabilities, our competence and our inconsistency.
-- Media Indonesia, Jakarta