Is Kwik dreaming?

(National Planning Board Chairman) Kwik Kian Gie remains faithful to his idea regarding the rupiah's exchange rate. He had proposed that Indonesia adopt a fixed rate system for the national currency even before he became a cabinet minister.

Such a fixed rate system would be effective provided that the government and the central bank can control a number of indicators, such as the inflation rate, which is tied to the amount of money in circulation.

In Indonesia at present, however, several of those indicators are still being influenced by factors outside the economic fundamentals. The market sentiment as well as social and political conditions, for instance, still predominantly govern the rupiah's exchange rate.

Kwik, however, believes that introducing a fixed rate system at present will isolate the rupiah from any non-fundamental uncertainty factors. But it seems difficult at this juncture to implement Kwik's proposal. It is probably no more than a dream -- unless the government of President Megawati is politically committed to push the idea through, whatever the risks involved.

-- Bisnis Indonesia, Jakarta