'Just a little wheel in the IMF machinery'

By Yenni Djahidin

WASHINGTON, DC (JP): For a man who has brought billions of dollars into the Indonesian economy, his appearance is hardly glamorous and his office looks simple and neat.

Dr. Hubert Neiss, the Asia and Pacific Director of the International Monetary Fund (IMF), gives the impression of a quiet and serious person, but one that always has a smile on his face.

The Austrian economist, who will retire soon from the IMF, said his involvement with Indonesia goes beyond his work. He said he is concerned about Indonesians, which he demonstrated by personally inspecting staple prices in the markets of Jakarta's slums.

Neiss, 64, a frequent visitor to Indonesia especially in times of crisis like now, says he knows he is in Indonesia when he gets off the plane and the heat and humidity slap him in the face.

"I don't say I don't like it, but I just have to get used to it," he said in an interview at his office here last week.

The soft-spoken economist, who likes playing the violin, wants people to see him as an IMF official who is trying to work with the Indonesian government on programs for economy recovery. He said it was a big mistake to see him as an "Indonesian minister".

Neiss visits Indonesia again this weekend with IMF deputy managing director Stanley Fischer. Their main agenda this time is to talk to leaders of the political parties who are likely to form the new coalition government after this month's general election in Indonesia.

In the interview, Neiss talked about his impression of Indonesia, the people and the officials he has dealt with. The following are excerpts of the interview:

Question: What do you like about Indonesia?

Answer: This is a place where I have to work. I don't go on vacation because I like the temples and the beaches and the dances. I go there because I am engaged with very intensive discussions.

Q: You were in Indonesia as an IMF representative in 1973. What was your impression of Indonesia then?

A: Yes, I lived there for two years with my family. I got quite familiar and quite attached to the Indonesian way of life.

I like the people. They are usually quiet and serious, but they also like humor and are very pleasant. I learned the language at that time, but I forgot most of it.

Q: What places do you like in particular?

A: I like to go to the countryside. Irian Jaya or Bali, at the time when rice is being planted or harvested. This is something I don't know from my own country. Of course, I like the Indonesian culture and tradition, the music. Gamelan, the flute, the violin. Javanese music is quieter and thicker. The Balinese are livelier and more aggressive. I like both, but I prefer the Javanese music. And, I like the dances. The Balinese dances are more colorful, more luxurious. I prefer the Balinese dance, the Ramayana dance, other dances, Barong and Kecak. And I also like the temples, the Hindu and Buddhist temples. When I was there, Borobudur was just being restored.

Q: Given your frequent visits to Indonesia over the past year, many people joke that you are the actual president of Indonesia, because you set the economic policies...

A: This is a big mistake, of course. I am just an official of the IMF. I am happy enough to work with the Indonesian government. But I can't dictate what happens in Indonesia. I can help to negotiate the program every month which the Indonesian government is free to agree or not to agree to. I have to persuade them, I have to give them good reasons. We have to win their trust so they know that there is a reason. And then we have to convince the IMF executive board that this is a good program and it needs financial support. So, I'm just one of many wheels in the machinery of how an IMF program works. It takes a lot of people to make this work. It takes many government advisors from many countries, the IMF staff, the World Bank staff, the ADB staff. Papers have to be produced. It takes the whole executive board to study the program every month, discuss it and decide.

I'm just a little wheel in this whole machinery.

But my interest and involvement in Indonesia goes beyond the purely financial and economic matters.

Q: Can you elaborate that?

A: For instance, I was very interested in the rice situation in Indonesia. That's something that IMF usually doesn't review. So, we had many discussions. If you remember in July and August, there were speculations, rumors of an impending famine. Rice stocks were low, rice was being smuggled away to Singapore. The distribution system was not working well because the Chinese (shopkeepers) had left. So, this was a very serious situation.

Something that normally doesn't occur within the normal work of an IMF official, but I was very concerned about it. I went to the market (Tanah Abang) every morning and checked the rice prices with the merchants. I checked them every morning during the crisis. First, I didn't believe the price because in the statistics we had the price per kilogram, but they had price per liter. So, we sorted it out afterward.

So there are many things that make this work more personal, more unusual, more intriguing.

Q: Can you describe your relationships with Indonesian officials like Soeharto, B.J. Habibie and Ginandjar Kartasasmita?

A: First, it's a working relationship. But it will never work if there wasn't a measure of personal trust, respect of each other's opinions. That I think is necessary.

Q: What do you think about Soeharto?

A: I only met him twice. He was very reticent. He was not very communicative, very reserved. The communication was not as close to be really effective. He had a translator, which makes it more difficult to get them personally in a relationship. Probably to have a closer relationship with Soeharto you would have to know him for years, meet him for years, work with him, deal with him. With Habibie, it was immediately an open relationship.

Q: So it's easier with Habibie?

A: Oh yes.

Q: What do you think of Habibie?

A: I think he will suddenly go into history with some significant achievements during a difficult period. I don't speak it for politically liberalization. Political prisoners were freed, press freedom was begun, political parties could be formed, and labor rights were signed. And most people forget he created a framework for a transition taking place. The timetable, the date. So, on the political side, I think this is very significant.

On the economic side, and this is where I really can talk with some knowledge, he has taken over the (IMF) program and was determined to implement it. In critical periods, he personally made sure that important decisions were made. And the record speaks for itself. Every monthly review was sanctioned by the executive board of the IMF, and as a result every month for the immediate period, a billion dollars were disbursed. This is a lot of money. The IMF board is very critical. They would not pay the money if the government policies were only half-hearted.

When there is a new government and whatever the new government will be, this government will not inherit an economy in ruins. They will inherit an economy that has stabilized, that has been partly rebuilt in capacity, and that is probably on the way to recovery. Don't forget the night when Habibie took over, the exchange rate went to Rp 16,000 to the dollar. Yesterday, it was Rp 7,800. Reserves were down then, now they are up again. Interest rates were 70-80 percent. Today they are around 23.5 percent.

So, things have improved and Habibie could muster all the international support that Indonesia needed.

Q: You seem to get along well with him? What about other government officials

A: One reason is he is very open to everybody. He doesn't have any formalities. He is very open and very spontaneous. The second reason is he speaks German and so do I. And occasionally we had a little chat in German. I have good experience working with Indonesian officials. I like to work with Ginandjar, he is very efficient. And of course I like to work with my old friends, Prof. Widjojo Nitisastro and Ali Wardana, who are still very important people in the formation of economic policies.

Q: What about opposition leaders?

A: That was very important. Otherwise, the economic program would be a playing ball in the political arena to the detriment of policy-making. Every opposition party would attack this or that part of the letter of intent. So, to preempt that, I made great efforts to explain to various opposition leaders. Also to the professors in the universities, the students, the union leaders. And to exchange views with them.

Basically, they agree with the strategy and therefore if they will form the government, they will not throw everything overboard and start something different. It will be continued. That is very important for a smooth recovery.

And also the markets know, so confidence is back. Everybody knows that if there is a different government, they will not overturn everything. Maybe they will do things differently here or there, but they will basically continue. They will continue to restructure the banks, they will continue with corporate restructuring, they will have careful monetary policies so inflation doesn't emerge. And for a while there will be an expansionary budget policy, partly to cover expenses of the social safety net. And this is the present strategy and I don't think it can be fundamentally different.

Q: You are confident that whoever takes power will continue the program?

A: They will continue the basic strategy and they will continue to have a relationship with the IMF. It has not been a politically controversial issue.

Q: Can you tell me what your philosophy is in life?

A: I have never thought about it.

Q: What is your personal ambition?

A: I don't think I have any ambition, that's for sure. If I had, it would be too late. You know, you have to start very, very early.

Q: Are you going to retire soon?

A: Yes, I will retire in January. In the IMF, everybody has to retire when he is 65. It's mandatory, except for the managing director, who can stay longer.

Q: What's your plan after the IMF?

A: Frankly, I tell you I don't know yet. I don't know yet but if possible, I would like to continue for a couple of years to work on the Asian countries. But in what form, in what way, I don't know. I don't even know whether there is such a thing. I haven't had much time to explore. I have work to do.

Q: Do you know who will take over your position?

A: Yes, of course. It will be one of the deputies. But there hasn't been any official decision.

Q: How did you end up with the IMF?

A: Thirty-three years. It will be 33 years next January.

Partly by coincidence. I studied here for a while in the States. I got a master's degree at the University of Kansas. I had a scholarship. So I always had the idea that maybe at some stage I may come back to it. And when I finished my studies in Vienna, I entered the Austrian Institute of Economic Research, and was there for five years. I was quite happy. One weekend, my boss gave me a newspaper and said, "there's an economic article, can you read it over the weekend, and give an assessment," which I did. But after reading the article, I turned the page and there was a little advertisement, and it was in English so it caught my eye. It said the IMF was looking for economists, and people who are interested should write to the Austrian National Bank. So I didn't want to write to the Austrian National Bank ... I wrote to the IMF directly in English and said, "I have read your advertisement, and I'm interested. Please ask me what you require and tell me what you offer." And, they wrote me back and didn't answer any of those questions. But said "somebody from Washington would be in Vienna at that time and would interview you." So I went to this interview. I never seriously thought this would get anywhere. All was forgotten. But weeks later, I got a cable offering me a job with the IMF in the European Department, starting January 1. It was November. At that time, we communicated by cable. So I said, "great." And they offered two years. I wrote them back. "I'm happy to come, but January 1 would disturb the Christmas vacation. Could I start February 1?" They wrote yes, and that's what I did.

Q: What year was that?

A: It was 1967, and I started working in the European Division. After two years, I was offered to stay for a period of time. I said, well, two years is a bit short, and we haven't got used to it. It said that I ought to stay for another two years. And then after four years, I was offered to come to the Asian Department.

I started as an economist, at the lowest rank. At the Austrian Institute, I was already higher. But I made some progress, and then I went to the Asian Department. They offered me to become a division chief. In that division, the only important country at the time was Indonesia. Then there were a few islands, Tonga and Western Samoa. So I started to go on missions to Indonesia. But I wasn't leading the mission. I got the offer to come to Indonesia for two years, 1974 to 1975.