Looking for a `Kwik' fix

Looking for a `Kwik' fix

The market has responded coolly to Tuesday's announcement of
President Abdurrahman's economic team. The reaction contrasted to
the rebounds we have become accustomed to in recent weeks.
Following the general election in June, the announcement of the
election results and the presidential election last week, the
market rallied on the back of the country's political
developments. The fact that the rupiah's exchange rate and local
stock prices have shown little change in the last two days means
that the market has neither accepted nor rejected the economic
team.

The problem with the team is that most of its members are not
familiar to the public. Kwik Kian Gie, who as coordinating
minister for the economy, finance and industry, heads the team,
is one of two exceptions to this facelessness. A politician with
the Indonesian Democratic Party of Struggle (PDI Perjuangan),
Kwik is well known for his astute and critical analyses of the
country's economy. Before joining PDI Perjuangan, the new State
Minister for Investment and State Enterprises Development
Laksamana Sukardi carved out a reputation in his commentaries on
the country's economic and banking scenes.

Since the other members are relatively unknown, Kwik and
Laksamana will have to pull their weight on the team in its early
days. Many people have aired doubts about the capabilities of
Minister of Finance Bambang Sudibyo and Minister of Industry and
Trade Jusuf Kalla. Other analysts have questioned the wisdom of
including two high-ranking Army officers in the economic team.

Despite it's unknown quantity, the market has given the
benefit of the doubt to the economic team. With the exception of
Minister of Maritime Exploration Sarwono Kusumaatmadja, who
served in Soeharto's Cabinets from 1988 to 1998, other team
members have had no experience in the complex and intricate
workings of running a government.

For the public, a lack of experience is not the biggest worry;
their concern centers on the credibility and track records of the
ministers. Bearing in mind the level of corruption in past
administrations, previous government experience could in fact
taint a minister's resume.

As Messrs. Kwik and Laksamana have often asserted in their
commentaries, market confidence is essential. This condition was
missing during the last administration, which was beset by one
scandal after another. The market lacked confidence in B.J.
Habibie's government, even though its economic policies, which
were drawn up with the International Monetary Fund, were deemed
workable.

The market's response to the new economic team demonstrated
that it is not so much concerned about individual members within
the team as about the team itself. With the team formed on the
basis of political bargaining rather than a calculated decision
to bring together the best people to carry out the job, concerns
have been expressed about the coherence of the team. It is made
up of people with different ideological backgrounds and
allegiances.

Let's hope that all team members will live by the adage of
people taking public office: that their loyalty to their party
ends the moment their loyalty to the nation begins. To win over
public and market confidence, Kwik and his colleagues must
overcome their ideological differences and project unity.

The former administration put Indonesia's economic recovery
process on hold for too long. Other Asian countries are already
well on the road to recovery. Indonesian programs have been in
existence for some time just waiting to be executed. The banking
recapitalization and debt restructuring programs may need to be
fine-tuned, but there is no reason for the new government to send
them back to the drawing board. These programs have not worked
thus far because there was simply no credible leadership to
implement them.

That major stumbling block has now been removed with the
establishment of a popularly elected government. Kwik should
seize on this opportunity to build on the confidence and trust of
the people and local and foreign investors. He must resist the
inclination to implement populist policies -- as the previous
administration often did -- and be prepared to take tough
choices. Even Kwik was once guilty of looking for a short cut
solution after he proposed a return to some form of a fixed
exchange rate system.

An economic recovery is a slow and painful process. But it
must start with winning public and investor confidence. That job
of restoring confidence is the government's primary task. There
is simply no quick fix for our economic ills.