Reform deadlines met: Minister
JAKARTA (JP): Indonesia has implemented all the reforms due this week under deadlines agreed with the International Monetary Fund (IMF), Coordinating Minister for Finance, Economy and Industry Ginandjar Kartasasmita said yesterday.
The minister said all reforms that had to be undertaken by April 22, and some due by April 24, had been introduced.
The government fully realized that the country's economic recovery depended entirely on the consistency and commitment with which the reform program was pursued, he added.
"It is true that it is not easy to change regulations and habits that have been in place for a long time, but we are determined to implement all reforms necessary to overcome the economic and monetary crisis and restore the development process," Ginandjar said at a meeting of the Economic and Monetary Resilience Council at the Bina Graha presidential office.
The meeting, chaired by President Soeharto, was attended by all council members including Minister of Finance Fuad Bawazier, Minister of Industry and Trade Mohamad "Bob" Hasan, State Minister for the Empowerment of State Enterprises Tanri Abeng, Bank Indonesia Governor Sjahril Sabirin, secretary general of the council Anthony Salim, and government economic advisors Widjojo Nitisastro and Radius Prawiro.
They discussed progress with the additional package of reforms agreed with the International Monetary Fund (IMF) early this month. Indonesia agreed to implements a 50-point program of reforms in January in exchange for US$43 billion in loans from the IMF.
At the media conference Ginandjar disclosed the reforms successfully implemented by their April deadlines. They are as follows:
* set minimum capital requirements for banks to Rp 250 billion by the end of 1998, after loan loss provisions.
* make loan loss provisions fully tax deductible, after tax verification.
* publish key monetary data on a weekly basis.
* establish a preparatory committee to prepare a central bank bill.
* transfer claims resulting from past liquidity support from Bank Indonesia to the Indonesian Bank Restructuring Agency (IBRA), and take the first steps to reduce export taxes on logs, sawn timber, rattan and minerals.
* remove the ban on palm oil exports and replace it with an export tax of 40 percent.
* lift restrictions on foreign investment in wholesale trade.
* establish a monitoring system for structural reform.
* amend the bankruptcy law.
* announce seven state enterprises to be privatized in 1998/1999.
Ginandjar pointed out that efforts to restore international confidence in the economy had shown encouraging progress and the rupiah had appreciated significantly against the U.S. dollar since the new Cabinet was installed on March 17.
"This shows that confidence in the rupiah and in our economy is gradually recovering. We hope the rupiah will continue to strengthen," the minister added.
An IMF official assured Ginandjar yesterday morning that its board meeting scheduled for May 4 would go ahead. The meeting will decide whether or not to disburse the second US$3 billion installment of the rescue package.
The World Bank will soon decide whether or not it will release US$1 billion of the US$4.5 billion which it pledged. The Asian Development Bank (ADB) has also yet to decide when it will hand over US$1.5 billion of the total US$3.5 billion promised.
"Japan and Australia pledged to give bilateral assistance, worth US$1 billion and US$300 million respectively, to strengthen our foreign exchange reserves," Ginandjar added.
Radius said a new round of negotiations to settle the country's US$68 billion corporate debt would be held from May 8 to May 10 in Tokyo.
The meeting will be attended by all members of the Indonesian Bank Steering Committee which represents creditors and debtors.
"IMF Deputy Managing Director Stanley Fischer, Fuad and Sjahril are also expected to be present at the opening ceremony," Radius said.
Tanri officially named the seven state firms to be privatized during this fiscal year and the five listed firms in which the government will reduce its stake.
The firms to be privatized include port management companies PT Pelindo I and PT Pelindo II, palm oil plantation firm PT Perkebunan Nusantara IV, toll road construction company PT Jasa Marga, coal mining company PT Tambang Batubara Bukit Asam, steel maker PT Krakatau Steel and airport management firm PT Angkasa Pura II.
The listed companies in which the government will reduce its stake include PT Telkom, PT Indosat, PT Semen Gresik, nickel and gold mining company PT Aneka Tambang and mining firm PT Tambang Timah.
"We expect to generate Rp 15 trillion from the privatization program," Tanri added. (prb)