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.