RI may register slight growth in two years: WB

RI may register slight growth in two years: WB

WELLINGTON (AP): Indonesia may begin to move out of its
profound economic crisis and see slight growth within two years,
a senior World Bank official said Monday.

Benjamin Fisher, the bank's country program coordinator for
Indonesia, told a seminar that Indonesia could see the beginnings
of growth of between zero and 2 percent in the financial year
ending on April, 2000.

By then investment may have recovered to about 4 percent and
imports may be growing, although not strongly, Fisher said. By
the following year there should be a return to even stronger
growth and better demand for products, he said.

"The Indonesian recovery is going to surprise a lot of
pundits," Fisher told the trade organization Asia 2000 seminar.

But the news in the short term was not good, with the economic
contraction continuing this financial year, Fisher predicted.

Since July last year confidence in the Indonesian economy has
collapsed and domestic demand has plummeted. Unemployment and
inflation have soared.

The Indonesian rupiah has dropped more than 80 percent against
the U.S. dollar and high foreign debt levels have left most
Indonesian companies technically insolvent.

Fisher said the prospects for Indonesia look good if stability
and reform can be maintained under the new leadership of
President B.J. Habibie.

The country's natural resources were very strong and the
Indonesian economy at the time of the crisis had not been nearly
as inefficient as people believed, he said.

However, corruption remains a serious problem, as does the
flight of foreign capital.

The Indonesian government could not afford to be complacent
about implementing reforms, Fisher said.

Corruption

Meanwhile in an opinion piece published in several Indonesian
newspapers, bank officials skirted a charge that some 20 percent
of money meant for projects in Indonesia had been siphoned off by
corrupt Indonesian officials.

However, they said the bank had to "honestly evaluate history,
including our own successes and failings."

"The central issue is not whether 20 percent of development
funds were or were not misappropriated; figures such as these are
the roughest of rough estimates," the officials said.

"What really matters is that corruption is widespread in
Indonesia and it poses a major obstacle to economic growth and
fairness. Wherever it is found, it must be stamped out," they
said.

The article said the Washington-based bank was considering
stepping up independent audits of aid projects and establishing a
project watchdog committee.

The officials, the bank's Vice President Jean-Michel Severino
and its Indonesia director Dennis De Tray said the watchdog
committee, if established, would take in non-governmental
organizations, "other members of civil society and increased use
of independent audits and international public sector reform
specialists."

De Tray and Severino said the bank had begun discussing this
plan with the Indonesian government.

They said the fight against corruption would "continue to be a
major priority in our dialogue with the government and will have
a significant influence on future lending."

The Wall Street Journal reported last month that Indonesian
officials were believed to have taken more than 20 percent of
bank project money allocated to the sprawling Southeast Asian
nation.

The newspaper cited a World Bank internal memorandum detailing
large-scale corruption.

Long present in Indonesia, the World Bank has been sharply
criticized for not blowing the whistle on the country's economic
mismanagement and frail banking system before Asia's financial
meltdown erupted last year.

The World Bank's soul-searching comes as the Indonesian
government also moves to show its commitment to cracking down on
the corruption, collusion and nepotism that characterized much of
the rule of former president Soeharto.

Last week, the government canceled some contracts linked to
the family of the former president and said it may review others.

Soeharto stepped down in May after riots and protests rocked
Indonesia.