Lack of political support blamed for economic woes
Lack of political support blamed for economic woes
JAKARTA (JP): A senior economist on Wednesday blamed failing
political support for the government's coalition cabinet as being
the main factor in the deterioration of the country's economic
recovery process.
Noted economist and head of the National Economic Council
(DEN) Emil Salim said that Indonesia's economic recovery was
already on the right track before political pressure against
President Abdurrahman Wahid mounted.
"In coalition cabinet, all parties should be supportive. But
now even the parties' leaders prefer to criticize it," Emil told
reporters on the sideline of a business gathering held by PT
Jakarta Industrial Estates Pulogadung.
He referred to Abdurrahman's coalition cabinet, which is
comprised of political parties that have brought him to the
presidency.
Emil, who served several ministerial posts under former
president Soeharto, was one the front runners of the reform
movement, which helped topple the former authoritarian leader.
According to him, Indonesia showed improvement in its
fundamental economy during the first six months after the
election of President Abdurrahman.
"Only since April have things started to get messy," he said.
He referred to the replacement of two senior economic
ministers, Laksamana Sukardi and Yusuf Kalla, both of whom
represented two leading political parties in the coalition
cabinet.
Politicians criticized the replacement as efforts by the
President to strengthen his political position. Abdurrahman, more
popularly called Gus Dur, defended the move saying that the two
ministers were replaced because they could not cooperate with the
other ministers.
The market has responded negatively to the cabinet friction,
as the rupiah plunged to its record low since President
Abdurrahman took office last October.
However, Emil added, Indonesia's democracy was only months
old, so that political discords were bound to occur.
Asked whether the central bank should intervene to stop the
rupiah from further dropping, he advised against it.
Emil said that since political uncertainties triggered the
rupiah's drop, any economic measures would be useless.
"Give the market stability," Emil said.
Consolidating the cabinet and ironing out any frictions were
key factors the government should work out in order to regain
market certainty and stability, he said.
According to Emil, the political consolidation should take
place before August when the President will give his
accountability speech before the People's Consultative Assembly.
He said the signing of the Letter of Intent (LOI) on Wednesday
should be a sign to the market that Indonesia's economy is
heading in the right direction.
The LOI, an agreement between the government and the
International Monetary Fund (IMF), was signed on Wednesday,
It contained economic terms to be followed by Indonesia for
the disbursement of the Fund's financial bailout.
He said when the Fund decided to postpone the disbursement of
some US$400 million to June it was because the government failed
to fully comply with the LOI.
Emil said that businessmen frequently asked the government
where the economy was heading too, while the LOI was already
showing a clear economic direction.
He said the market had also acted confused over mounting calls
to peg the rupiah, which the LOI rejected.
"I say your guideline is what's stated in the LOI," he said.
He added that the signing of the LOI should provide calmness
to the market and help strengthen the rupiah.(bkm/07)