Indonesia must heed global market wishes, says Emil

Indonesia must heed global market wishes, says Emil

JAKARTA (JP): Indonesia has to keep up with what the global
market expects from the country if it wants to get global
investors' support for its economic reforms, a senior economist
and former cabinet minister has said.

Emil Salim said over the weekend that Indonesia had become a
part of the global society when it adopted a strict economic
reform package set out by the International Monetary Fund (IMF).

"We have joined the global arena. We are now a citizen of the
global society."

Emil said measures stated in a letter of intent signed by
President Soeharto Thursday allowed the global market to
participate in the nation's economy.

The global market would also share in reshaping Indonesia's
political life, including the leadership succession.

"If Bapak (President Soeharto) does not continue, the question
is who would be accepted by the market to lead this reform
implementation and make sure that the reforms proceed? Only the
market can answer that," he said.

Emil did not mention possible candidates, arguing that the
global market was unpredictable and could not be
institutionalized at a crisis center.

"The market will flow funds in and out. It can not be handled,
it can not be commanded," he said.

But the most important thing for the country, he said, was to
fully implement all of the 50-point measures stated in
Indonesia's Memorandum of Economic and Financial Policies.

On domestic trade, the government promised to eliminate trade
barriers between provinces that prevented local traders from
competing in the domestic market.

"We used to have trade barriers between provinces. Now they
are open. Why? Because we shall prepare ourselves for the opening
of our national trade barriers in 2003," he said, referring to
the ASEAN Free Trade Area which will begin in 2003.

Now food producers, including farmers, may set their prices in
line with market prices.

People are also now free to import wheat and produce wheat
flour without first dealing with institutions like the State
Logistics Agency.

"Now it is capability that counts, not connections (with power
holders). This is the sense of the reform," he said.

Under the IMF-sponsored reform program, the government agreed
to scrap major monopolies and reduce or eliminate the politically
sensitive fuel and electricity subsidies.

The government also promised to discontinue any privileges to
the national car program run by Soeharto's youngest son Hutomo
Mandala Putra and abolish any budgetary and extra-budgetary
support and credit privileges to the state aircraft manufacturer,
PT IPTN.

The government was also compelled to revise unrealistic
assumptions behind the 1998/1999 draft budget, including reducing
economic growth estimate to zero percent, raising inflation rate
to 20 percent and the rupiah exchange rate to 5,000 per one U.S.
dollar.

Emil viewed the zero percent growth projection, which means
that Indonesia sets no economic growth target this year, as a
standpoint from which Indonesia could start strengthening its
economy.

"In 1998, our economy could hit the lowest point it has ever
reached. But it will not continue to slope downward. This year
may be a dark period, but after that we will move higher," he
said on a positive note.

He said Indonesia could start its economic reform program by
improving the productivity Indonesians so that foreign workers
from neighboring countries, like Malaysia, the Philippines or
Thailand, could be expelled.

"We have failed in this very important sector, the human
resources sector. That's why we have to go all out to empower
Indonesia's human resources," he said. (09)