New reform measures expected next week

JAKARTA (JP): The government will announce next week, after several delays, a new economic reform package aimed at boosting economic efficiency.

State Secretary Moerdiono said yesterday, after meeting with President Soeharto, that the President had approved in principle the deregulation package proposed by ministers but "there are things that still need fine tuning".

He was accompanied by Coordinating Minister for Economy and Finance Saleh Afiff, Coordinating Minister for Production and Distribution Hartarto, Minister of Industry and Trade Tunky Ariwibowo, Minister of Finance Mar'ie Muhammad and Bank Indonesia Governor Soedradjad Djiwandono.

Moerdiono did not say what day next week the deregulations would be announced but Coordinating Minister for Production and Distribution Hartarto said it would be on Monday.

"There are things that still have to be considered ... views and policies outlined by the President that we must re-elaborate, and this will take time," he said.

"Hopefully we can announce (the deregulations) next week," he said.

Moerdiono said the reforms would increase economic efficiency, boost Indonesia's competitiveness, slash unnecessary levies and boost the domestic economy, particularly that of small and medium businesses.

He said the deregulations were final and the delay was caused by "administrative reasons".

Earlier, finance ministry officials said the package had been finalized and was likely to be announced after yesterday's meeting.

The deregulation measures were previously scheduled to come out last month but Coordinating Minister for Economics and Finance Saleh Afiff reportedly said on June 20 there were some differences of opinion among ministers involved in drawing up the proposals.

On June 25, Moerdiono said the package was at the final stage, indicating the differences were resolved.

The World Bank in its latest report on Indonesia says that Indonesia's deregulation program is losing momentum and that this could affect the health of the economy.

Economist Faisal Basri said deregulation packages would not be effective if they only aimed at removing import tariffs.

"Deregulations will become less and less effective unless they manage to improve the market structure and increase corporate efficiency," said Faisal, head of the department of economic development studies at University of Indonesia's School of Economics.

Faisal was quoted by Antara as saying that deregulations which only aimed at slashing import tariffs were "very dangerous" because they did not touch on the root of the problem, which was the high cost of doing business here.

"Deregulations imply that prices will go down, but what will happen if costs don't go down as well? " Faisal said.

Businessman Aburizal Bakrie agreed, arguing yesterday that deregulation was essential but "not enough", especially if it was aimed at only reducing import tariffs.

He said it was equally important to deregulate licensing procedures to reduce the high cost of doing business in Indonesia.

Antara quoted several sources as saying that the up-coming economic reforms would streamline investment procedures and deregulate several industrial sectors, except the automotive and petrochemical industries. (pwn)