Results of June elections key to recovery: Summers

JAKARTA (JP): U.S. Deputy Secretary of the Treasury Lawrence Summers said here on Monday that results of the general election in June and the progress of the economic reform plan are key to Indonesia's economic recovery.

"The confidence of the international community in both the private and public sectors attached to the conduct of the June elections is a key factor in bringing about further confidence, both domestic and foreign, in Indonesia's economic future," Summers said after meeting with President B.J. Habibie at Merdeka Palace.

He cited the restructuring of the country's messy banking sector, a solution to the private sector's mounting debt problem, and the effective implementation of the bankruptcy law and the social safety net program as the most crucial points to put Indonesia's economy back on track.

During the meeting with the President, Summers was accompanied by Coordinating Minister for Political and Security Affairs Gen. (ret.) Feisal Tanjung and Minister of Finance Bambang Subianto.

Summers arrived in Jakarta from Singapore on Sunday as part of his five-nation Asian tour to see how the region was coping with the economic crisis. The other countries on the itinerary are China, South Korea and Japan.

After Summers' visit, Habibie is scheduled to receive Secretary of State Madeleine Albright next month.

"We note that there has been progress in recent months on a number of issues relating to financial stability, though (it's) essential to make better progress going forward," Summers remarked on Indonesia's economic situation.

He also said the government's policies should be carried out with integrity and without favoritism and should be backed up by political changes.

However, Summers also praised the government for its achievements in political reforms and said there was a great opportunity to further entrench democracy and restore the potential for rapid economic growth.

He said the trust in the future of Indonesia's economy would also rely on the enforcement of the rule of law, upheld on an equal and unselective basis.

"This means, above all, making sure that every Indonesian can feel secure in their country, in their life, in their property and in their future," the official said.

Summers declined to give an explicit reply when asked about the U.S. readiness to back up Indonesia's request for about US$1 billion in additional loans from the International Monetary Fund (IMF) on top of its $10 billion pledge.

"We agreed on the importance of Indonesia adopting programs that the international financial institutions could support with confidence, secure in the knowledge that resources would be well used," he said.

The Palace did not issue any statement about the meeting.

However, when speaking at the 87th anniversary commemoration of the Bumiputra 1912 Life Insurance firm, the President said his government would not repeat the mistakes of the previous government which gave too much attention to economic growth and ignored issues of equality.

"The policy, as we all know, eventually just created conglomerates," Habibie said. (prb)