'Indonesia needs to adjust to new realities'
'Indonesia needs to adjust to new realities'
JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
said that Indonesia needs to keep adjusting its economic policies
to the world's new realities to make the country's economy more
competitive.
"Facing a world economy characterized by uncertainties and
tough competition, we want to keep making adjustments to these
new realities to make our national economy competitive,"
Soedradjad said at a ceremony for the presentation of Asian
Management Awards to five local firms at the Hilton hotel on
Tuesday night.
Soedradjad said the government will always adjust its economic
policies to new realities by continuing deregulation measures and
maintaining prudent macro-economic management.
One keystone element in the foundation of a sound economy, the
governor said, is government discipline in the implementation of
budgets and in the growth of the money supply, complemented by
realistic exchange rates.
He said the government will continue its prudent and
consistent fiscal and monetary policies, as they have become the
backbone of its macro-economic management.
"Although this policy might be inconvenient for some, at
certain periods, it is the only realistic path if we want to
achieve the annual 7.1 percent economic growth target,"
Soedradjad said.
He stressed that the government had pursued a series of
deregulatory measures during the last decade, not because it is
fashionable to do so, but because the country wants its economy
to be efficient across the board.
"To be efficient, we must allow our scarce resources to move
in the most optimal manner possible. For this, our economy must
be made responsive to market signals. That is the essence of our
deregulation policy," Soedradjad said.
The governor said that to ensure efficient utilization of
resources, competition must be created. "Future policies will
continue to stress the need to be competitive."
With the country's open economy, Soedradjad said Indonesian
enterprises are engaged in global competition, even if they are
not all engaged in exports. He suggested that local enterprises
learn to compete on the world market even when they produce for
the domestic market.
"We will be facing an increasingly competitive world even in
our own market," Soedradjad said, reasoning that trade barriers
and the level of domestic protection will have to be gradually
lowered, consistent with the country's commitment to the World
Trade Organization and the free trade arrangements in Southeast
Asia.
He predicted that increased competition will also be
confronted by Indonesian financial institutions in line with the
conclusion of the Uruguay Round talks on trade in services, which
will give more room to foreign banks and other financial
institutions to operate in any country.
He said the trend towards tight competition in the financial
sector will lead to a rapid pace of financial liberalization,
which will result in the emergence of new banks and non-bank
financial institutions.
Along with those processes, Soedradjad said, the role of non-
bank financial institutions, such as pension funds, multi-finance
and insurances, as well as capital markets will increase rapidly
during the coming years.
"All of these developments will create more competition that
will serve to challenge banks in the years to come," Soedradjad
said. (04/rid)
JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
said that Indonesia needs to keep adjusting its economic policies
to the world's new realities to make the country's economy more
competitive.
"Facing a world economy characterized by uncertainties and
tough competition, we want to keep making adjustments to these
new realities to make our national economy competitive,"
Soedradjad said at a ceremony for the presentation of Asian
Management Awards to five local firms at the Hilton hotel on
Tuesday night.
Soedradjad said the government will always adjust its economic
policies to new realities by continuing deregulation measures and
maintaining prudent macro-economic management.
One keystone element in the foundation of a sound economy, the
governor said, is government discipline in the implementation of
budgets and in the growth of the money supply, complemented by
realistic exchange rates.
He said the government will continue its prudent and
consistent fiscal and monetary policies, as they have become the
backbone of its macro-economic management.
"Although this policy might be inconvenient for some, at
certain periods, it is the only realistic path if we want to
achieve the annual 7.1 percent economic growth target,"
Soedradjad said.
He stressed that the government had pursued a series of
deregulatory measures during the last decade, not because it is
fashionable to do so, but because the country wants its economy
to be efficient across the board.
"To be efficient, we must allow our scarce resources to move
in the most optimal manner possible. For this, our economy must
be made responsive to market signals. That is the essence of our
deregulation policy," Soedradjad said.
The governor said that to ensure efficient utilization of
resources, competition must be created. "Future policies will
continue to stress the need to be competitive."
With the country's open economy, Soedradjad said Indonesian
enterprises are engaged in global competition, even if they are
not all engaged in exports. He suggested that local enterprises
learn to compete on the world market even when they produce for
the domestic market.
"We will be facing an increasingly competitive world even in
our own market," Soedradjad said, reasoning that trade barriers
and the level of domestic protection will have to be gradually
lowered, consistent with the country's commitment to the World
Trade Organization and the free trade arrangements in Southeast
Asia.
He predicted that increased competition will also be
confronted by Indonesian financial institutions in line with the
conclusion of the Uruguay Round talks on trade in services, which
will give more room to foreign banks and other financial
institutions to operate in any country.
He said the trend towards tight competition in the financial
sector will lead to a rapid pace of financial liberalization,
which will result in the emergence of new banks and non-bank
financial institutions.
Along with those processes, Soedradjad said, the role of non-
bank financial institutions, such as pension funds, multi-finance
and insurances, as well as capital markets will increase rapidly
during the coming years.
"All of these developments will create more competition that
will serve to challenge banks in the years to come," Soedradjad
said. (04/rid)