PDI, PAN, PBB support foreign investment but criticize IMF

Political and legal issues, including investigating former president Soeharto and the threat of separatism, dominate the current political campaign. Economic issues, including those on foreign investment and the role of the International Monetary Fund (IMF), are barely touched upon by any political party during their campaign. The Jakarta Post talked recently to the leaders and economic experts of three major parties -- the Indonesian Democratic Party of Struggle (PDI Perjuangan), the National Mandate Party (PAN) and the Crescent and Star Party (PBB) -- on the issue.

JAKARTA (JP): If the general election results in a change of the country's leadership, what will happen to foreign investments?

The question is crucial in light of the fact that foreign investments have played a dominant role in the country's economy.

Foreign investments which dominated the oil and gas and mining sectors before the crisis have expanded into other sectors. Some major foreign giants have expressed their commitment to enter the banking sector, while several others might soon take over some of the country's debt-laden conglomerates.

Foreign investors' dominance has sparked jealousy in many local businesspeople. Most political leaders, however, are not really bothered by the foreigners' paramount role.

PBB's deputy chairman, Farid Prawiranegara, PDI of Struggle's secretary general, Laksamana Sukardi, and PAN's economic expert, M Nawir Messy, said they could accept the reality.

If anything, they said, foreign investment was needed to speed along the country's economic recovery.

"For us, ownership is not an important issue. Soeharto's administration made it an important issue, to allow his children and cronies to acquire some shares in the companies for free," Farid said.

"What is more important for PBB is that workers should have their representatives in companies' management -- be they foreign companies or local companies -- to allow them to participate in the companies' supervisory board," Farid said.

PBB would propose for an amendment of the Corporate Law to make the participation of workers in the supervisory board as obligatory.

PDI of Struggle vowed to promote a sound market economy in the country to lure global capital market.

"As (PDI chairwoman) Megawati (Sukarnoputri) said in a recent meeting in Singapore, 'We share the market (that is) interlined together'," Laksamana said.

Laksamana said PDI of Struggle has made "Restoring Confidence" as its main economic platform given the fact that the country has lost the confidence of the international business community as a result of economic and political turmoil.

Under the Restore Confidence agenda, PDI of Struggle will seek to provide legal certainties, create social stability and promote clean governance.

"This is, in fact, a long-term program but it must be carried out in tandem with any short-term and middle-term programs given the urgency of handling the issue," Laksamana said.

Nawir said PAN's team of economic experts realized the importance of foreign investment, but "Indonesia should not be too dependent on foreign capital".

Indonesia should also make a regulation to prevent foreign investors from controlling all aspects of the country's economy.

For PAN's economists, Nawir said, the government should find novel ways to increase income from domestic resources to finance its developmental programs rather than asking for more loans from foreign financial institutions and governments.

Social damage

The three political leaders supported the IMF's role in helping Indonesia survive the crisis. But they criticize the agency for giving "too much" instruction to the government.

Laksamana praised the IMF for its "successful efforts to contain the damage caused by the crisis on the country's economy."

"So far, so good," he said, crediting the country's currency stabilization and the decreasing trend in the country's inflation rate to the IMF, which has arranged billions of dollars in bailout funds to cover Indonesia's worst ever crisis.

But, Laksamana said, the government's high interest rate policy as dictated by the IMF has caused "social damage".

He also criticized the privatization program being carried out by the government on the IMF's instruction, saying the timing was not right to sell the assets of state companies.

"Offering the assets now is only wasting time because no one is going to buy them.

"The privatization should be carried out systematically and with the right timing," Laksamana said.

Laksamana said the IMF had always consulted with PDI of Struggle before signing any letter of intent with the government, and the IMF had mostly "heard" the party's opinions, except for the privatization issue.

Farid blamed the IMF for the economic hardship currently being experienced by the country.

"If the Crescent Star Party wins the election, we shall face IMF in a different way. We shall not ask it for money but demand it be held responsible for all that has happened in the country," Farid said.

Farid blamed the IMF for making blunders in carrying out its economic recovery program since it was not backed up with a good political analysis of the situation in Indonesia.

He accused people like Coordinating Minister of Finance, Economy and Industry Ginandjar Kartasasmita, PAN's chairman, Amien Rais, the People's Awakening Party's chairman, Abdurrahman Wahid, and Megawati -- with whom IMF has often consulted with -- as giving misleading political judgments to the IMF.

"The IMF is an experienced organization. Why has it made mistakes in Indonesia? Undoubtedly because it received wrong the input from the wrong people," Farid said. (jsk)