Reform welcomed with some reservations

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