'Indonesia must develop its own economic strategy'
Fitri Wulandari, The Jakarta Post, Jakarta
Thailand's former minister of commerce Narongchai Akrasanee suggested that in order for Indonesia to accelerate its economic recovery process, it must not rely too much on "ready-made policy" from multinational lenders such as the International Monetary Fund and the World Bank.
A ready-made policy could not be applied in every country as they did not all share similar economic conditions and backgrounds, he argued.
"The formula of liberalization, deregulation and privatization as endlessly advocated by the World Bank and IMF cannot be taken as a cure-all strategy," Narongchai said in his keynote speech at a seminar on Indonesia's Strategy for Economic Development hosted by The Jakarta Post here on Monday.
"They belong to the global economic model ... but when you look at a country, the situation is different. Each country is different in the area of trade, financing and technology," the chairman of Seranee Holdings Co., Ltd said.
Narongchai said that Indonesia must develop its own strategy on economic development by focusing on foreign trade, international financing and technology.
"It (the strategy) depends on how good you are in trade, finance and technology. Although it takes consideration of this global model, the strategy should be designed to fit your situation in these areas," he added.
Thailand is among the Asian countries that have managed to emerge out of that 1997 financial crisis that hit the region.
Meanwhile, Indonesia is still muddling through and debating on whether or not to part ways with the IMF after 6 years. Thailand has already graduated from IMF tutelage.
Thailand sought a US$17.2 billion rescue program from the IMF in August 1997 during the Chavalit government. Of the $17.2 billion IMF package, Thailand actually drew down only $12 billion to help prop up the baht.
After undergoing painful reform and taking unpopular measures, Thailand recovered from the crisis in 1999.
Since then Thailand has made progress in its financial and structural reforms. So far, It has repaid $7 billion to the IMF. There remains $4.8 billion in outstanding loans. The last repayment to the IMF is due by May 2005.
Last year, Thailand's economy grew by a surprisingly good 5 percent on the back of robust domestic consumption.
Early this year, the Thailand government announced it planned to repay all its remaining debts to the IMF by the first half of 2003.
Thailand, Narongchai said, had started its own strategy called "the Dual-Track Economic Policy" or "Local/Regional Link - Global Reach".
Under this strategy, Thailand is giving more attention than before to the domestic market, which has been the primary mover of its economy.
"Domestic capacity enhancement is the key issue," he said.
At the same time, the country is targeting ASEAN, East Asia and other Asia countries as its foreign markets.
However, this is being done without abandoning its links with traditional trading partners in the West.
While continuing to promote export, Thailand is paying more attention to the domestic market than ever before.
As for foreign trade, Narongchai said, the country is developing industries that can compete internationally, such as in the areas of food processing, tourism and the automotive industry.
In international finance, Thailand is beginning to access international money and capital markets for the purpose of owning its own businesses.
"We must make sure that reliance on foreign financing is for the purpose of eventually owning businesses," he remarked.
Narongchai said that although Thailand has access to international financing, so far it could not own its own businesses as such financing went hand-in-hand with foreign control.
"Thus, we cannot afford a fully open capital account despite what the IMF tells us," Narongchai stressed.