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)