PwC sees successful reforms in Indonesia

PwC sees successful reforms in Indonesia

SINGAPORE (Dow Jones): Indonesia will make a successful transition to democracy and a stable market economy, but its ride will be bumpy, an executive of PricewaterhouseCoopers predicted Monday.

"Indonesia has a bright future down a long, bumpy road," said Ian Paroissien, country senior partner in Jakarta, at a seminar in Singapore.

Despite economic troubles, widespread corruption and separatist movements in some regions, "I think there is a sense of optimism in Indonesia," said Paroissien. "I think there is a belief in the future."

Elections this year produced a leadership under President Abdurrahman Wahid that is committed to building democracy, preserving national unity and putting Indonesia on a sound economic footing, Paroissien said.

Rising prices for oil and other commodities should help economic recovery in the far-flung, resource-rich country, which saw its economy contract by nearly 14 percent in 1998 as Asia suffered its worse financial crisis in decades.

In addition, the International Monetary Fund, World Bank and other international financial institutions have made aid to Indonesia, the world's fourth-largest country, a high priority, he said.

Some analysts have said that Indonesia, which lost the province of East Timor this year after a bloody struggle, is threatened by secessionist movements in Aceh and other provinces.

However, Paroissien said it was unlikely that Indonesia will fall apart. Unlike East Timor, which Indonesia occupied after the Portuguese withdrawal in the 1970s, provinces like Aceh have always been a part of Indonesia, he said.

He predicted "a positive political solution" to calls for independence in Aceh and other provinces. The solution will involve some devolution of political authority and greater sharing of government revenue.