Law and order key to economic cure: Budiono

JAKARTA (JP): National Development Planning Board (Bappenas) Chairman Budiono said on Wednesday that maintaining law and order was essential if the country was to overcome the economic crisis.

He explained that although the crisis-hit economy was already starting to bottom out, as shown by the positive trends of various economic indicators, the sociopolitical conditions would still be a significant factor in determining the future course of the economy.

"Based on my discussions with businesspeople, the most important factor in passing through this transitional period is maintaining law and order," he told a seminar on the economy organized by the alumni of Gadjah Mada University.

He added that some businesspeople deemed that Indonesia was still below crisis-hit Thailand and South Korea in terms of law enforcement.

Parts of Jakarta descended into lawlessness on Saturday for several hours following a bloody clash the previous day between the military and students who were protesting last week's Special Session of the People's Consultative Assembly.

They deemed it failed to implement major political reforms and was only intended to maintain the status quo of the military, the ruling Golkar party and President B.J. Habibie -- all of which are seen as inextricably linked to former president Soeharto.

The chaos almost matched the scale of the widespread rioting, arson and looting which took place in May that led to Soeharto's fall.

Students continued their rallies on Wednesday.

"Businesspeople are skillful in dealing with various risks under normal conditions, but in the absence of law and order they face difficulties," Budiono said.

He said, however, that maintaining law and order was not meant to preserve (the political) status quo.

"In the context of law and order, there can still be complete (political) reform," he added.

"We are currently at the crossroads. What we decide today will determine where we will be in the next six to 12 months," he said.

He pointed out that there were two scenarios: the good and the bad.

"Where the country will end will depend on whether we can maintain law and order," he said.

He explained that the good scenario would be a synergy between positive economic development and stable sociopolitical conditions so that the country could have a high quality general election, which is scheduled for next year.

"If this can be achieved, our economy will recover by the year 2000," he added, pointing to the chain reaction of a stable and stronger rupiah pushing down inflation and interest rates, which in turn would increase capital inflows, boost production and investment, improve the supply of commodities, and further lower inflation.

"This virtuous circle is not something automatic because in every link of the chain there's a precondition linked to the sociopolitical system and progress in structural and institutional reforms," Budiono said.

He was optimistic that there was a great probability that the good scenario would emerge because the nation's political leaders, both formal and informal, were still rational and loved the country.

The International Monetary Fund said on Saturday, after completing its regular monthly review on Indonesia's economic reform programs, that the country was continuing to make encouraging progress in overcoming the crisis.

Since early September the rupiah had strengthened considerably and inflation had slowed abruptly, the Fund said, adding that interest rates had also begun to fall.

The government has promised that rates will decline further if the rupiah remained stable and inflation continued to improve. (rei)