Reform welcomed with some reservations
JAKARTA (JP): Economists lauded the government's new economic reform package approved by the International Monetary Fund (IMF) over the weekend, but expressed concern over the implementation of the measures.
Economist Sri Mulyani commended the government's compromise to open up the State Logistics Agency's (Bulog) monopoly on certain commodities.
"The government has proved that it can be flexible in meeting public expectations," Sri told The Jakarta Post about the government's reform package.
Reform of financial and banking sectors was a key objective of the package announced Friday by the government and the IMF.
IMF managing director Michael Camdessus announced Friday in Washington that there would be a US$23 billion bailout package to restore confidence in the Indonesian economy.
Anwar Nasution, another economist, said the government had to implement all the reform measures if it wanted to bring the country's economy back on the right track.
"The government has finally sought the medical attention of a doctor. Now it depends on whether we'll follow the doctor's orders and take all the medicine or not," he said.
Former minister of finance Frans Seda said he was optimistic the reform package would help the country regain confidence in its economy.
"But it depends on us if we can regain global trust," Seda said.
Christianto Wibisono, the director of the PDBI business data center, said the new reform package was aimed mostly at restoring people's confidence.
"With the new measures, the government has shown that it can be firm on several issues, including the Timor car project and strategic industry projects," he said.
The government said it would abide by any decision made by the World Trade Organization in the reform package. It also agreed to review investment and expenditures by the public sector, including government expenditures for state-owned enterprises and strategic industries.
Christianto said he was really impressed with the government's strict measures and hoped the government would do the job properly.
"We hope the government will keep its promise," he said.
Lecturer Bungaran Saragih of the Bogor Institute of Agriculture welcomed the government's move to scrap Bulog's trading monopoly of certain commodities, in efforts to reduce market distortion.
"It's definitely a step in the right direction," Bungaran said Saturday.
He said Indonesia did not need to worry if reform would result in foreign agriculture products swamping the country's markets, as the rupiah slump would increase the price of imports.
Twenty percent import tariffs were enough to protect local soybean and garlic farmers, he said, adding that the 10 percent import duty on flour products was also reasonable.
Minister of Finance Marie Muhammad announced yesterday that trading in commodities monopolized by the state, including wheat, wheat flour, soybeans and garlic, would be freed for companies with general importer status.
But Nasution said he feared the lifting of Bulog's monopoly on imported wheat would benefit only certain companies, such as Bogasari.
"We don't want the measure to end up only handing over the monopolizing right of the state to Bogasari," he said.
If the measure was implemented fully, productivity would improve and commodity prices would decline, he said.
This must also be done with cement and fertilizer, so that prices could go down to increase exports, he said.
Nasution said he was also concerned that the new package did not explain government efforts to improve exports of non-oil products and gas.
"Only through these exports can we improve our economy, but I did not hear either Minister of Industry and Trade Tunky Ariwibowo or Minister of Finance Mar'ie Muhammad mention it (Friday night)," he said.
Christianto said the effect of the new reform package would not be felt until the beginning of next year, when the lift on Bulog's monopoly was officially implemented. (team)
Bureaucracy -- Page 2
Editorial -- Page 4
Reaction -- Pages 10
IMF, Market -- Pages 11 and 12