More deregulation measures needed to boost economy

JAKARTA (JP): The government's deregulation measures are not yet sufficient to boost the economy, a senior economist said yesterday.

Ali Wardhana, a former finance minister and currently the government's senior economic advisor, said more deregulation measures were needed to sustain the country's high economic growth.

"Despite the progress in establishing sound economic fundamentals, much remains to be done in achieving solid record economic growth," he told a business luncheon.

The government has since 1983 introduced several packages of economic reforms to stimulate economic activities.

But many economists said the government's deregulation measures did not deal with the country's real issues such as business inefficiency and red tape. Deregulation has also not yet touched the monopoly of certain business groups or institutions.

Coordinating Minister for Economy and Finance Saleh Afiff said last month the government would scrap the monopoly given to the National Logistics Agency (Bulog) to import certain important commodities such as sugar and wheat.

"Halfway measures are not enough," said Ali. "If we want to successfully and speedily address the unfinished deregulation agenda, especially if we implement measures to deal with weaknesses in our financial sectors, there is no doubt that Indonesia will rapidly regain its growth momentum."

He admitted yesterday that Indonesia had created a vibrant economy which had produced a strong record of growth lifting millions of people out of poverty.

"Indonesia has spread the benefits of development to many people," he said.

But he warned the government should not be too quick to boast about the country's successful economic development.

"The danger is that pride in our development achievements will create a feeling of complacency and lead us to believe that we have done all that needs to be done. This is far from correct," he said.

He said recent currency market turbulence, for example, should make the government more aware of the need for further reforms.

"The shock of the currency movements should stir us from any feeling of overconfidence that may have existed.

"The recent turbulence surrounding the regional currencies should be a wake-up call for Indonesia," he said.

The country's resident chief of the World Bank Dennis de Tray also highlighted yesterday the need for Indonesia, along with other Southeast Asian countries, to continuously reform their financing system to boost development.

"But in the case of Indonesia, further reforms should not only be taken in the face of a currency crisis... but also for the whole economic system," he said.

Dennis said reforms in the financing system and real sectors should be taken more quickly and transparently to solve current problems hampering the country's economic development. (aly)