More concrete steps needed to defend rupiah: Economists
More concrete steps needed to defend rupiah: Economists
JAKARTA (JP): Economists and members of the House of
Representatives said they were optimistic the rupiah would soon
stabilize but warned that more concrete measures were needed for
similar currency turmoil in the future.
Like other analysts, Anwar Nasution, a senior economist of the
University of Indonesia, said that he believed Bank Indonesia's
recent move to remove the intervention band would end the
speculative attacks on the rupiah.
But Anwar cautioned that more measures were needed to ensure
that the rupiah would not become a target of speculators in the
future.
He said more concrete steps should be taken to follow up the
removal of the rupiah's intervention band.
"They urged for the introduction of monetary and fiscal
measures to shore up the rupiah, ... but what they are? ... they
did not mention them in specific," he said of a government
official's statements.
He cited that more guidelines should be issued to address the
weakness in the country's economic illness, such as the country's
ailing banks.
President Soeharto said in his speech on the eve of the
commemoration of the 52nd anniversary of Indonesia's Independence
Day, that the government would continue to maintain the tight
money policy to stabilize the rupiah.
Soeharto also hinted at a possible curb on foreign borrowings
to maintain the balance of payments in a sustainable level.
Commenting on the possible curb of foreign borrowings,
Coordinating Minister for Economy and Finance Saleh Afiff said
such a move would be counterproductive.
"The private sector can only voluntarily control its
borrowings," Afiff said, adding that a regulation which controls
foreign borrowing by the private sector would only hurt the
investment climate.
Indonesia's overall foreign debt stands at more than US$110
billion, half of which is owed by the public sector.
Economist Emil Salim, a former minister of environment, said
it was not necessary to issue a new ruling to curb private
borrowings.
"I think the best way for the government, is to activate the
commercial borrowing caps set several years ago," he said.
Economist Faisal Basri said the most important thing for the
government was to issue rulings eliminating the practices of
monopoly and oligopoly in the country.
Legislator Tadjudin Noor Said of Golkar wondered as to whether
the country's economic fundamentals were as strong as the
government stated.
"Instead of blaming only the rupiah upheaval on speculators,
we'd better look at ourselves to see the any weaknesses in our
economic structure," said Tadjudin.
Tadjudin said the weaknesses include the fact that most of the
country's assets were controlled by the top 200 taxpayers, and
economic development was concentrated in one area, that is
Jabotabek (Jakarta, Bogor, Tangerang and Bekasi).
About 75 percent of foreign investment was in Jabotabek during
the Sixth Five Year Development Plan, which will end in 1998, he
said.
"I am afraid what the government claimed as a 7.98 percent
national economic growth may be the growth of the top 200
taxpayers (big conglomerates) or the economic growth in the
Jabotabek area," he said. (aly/jsk)