RI must do some homework to meet APEC goals: Experts

Berni K. Moestafa, The Jakarta Post, Jakarta

Last week's summit of the Asia Pacific Economic Cooperation (APEC) forum in China provided Indonesia with few clues on how to tackle the global economic downturn, which has slowed preparations for a free trade area, other than to press the government to do its homework better, economists said.

Economist at the Institute for Development of Economics & Finance (Indef) Dradjad H. Wibowo said APEC's joint declaration was strong in words but weak in details.

"The APEC declaration is a generic statement, acceptable to all members," Dradjad told The Jakarta Post.

APEC's 21-members vowed in a joint declaration to revive their economies, but refrained from citing supporting measures.

Ending last Sunday, the summit marked the first opportunity for world leaders to discuss the devastating impact of last month's terrorist attacks in the U.S. on the global economy.

These attacks have left a gaping hole in world trade, triggered by a sharp plunge in U.S. consumer and business confidence.

In its draft, the APEC declaration called on members to undertake pro-growth fiscal and monetary policies to overcome the slump. But Indonesia could do neither, Dradjad said.

"Some countries like Indonesia can't provide much fiscal stimulus given their budget deficits... a monetary stimulus is also unlikely as it is not the time yet to lower interest rates," he said, adding that every nation had its own ways to revive the economy.

China, for instance, would likely seek to revitalize its industries amid a slump in exports to the U.S., he said.

Elsewhere, the Malaysian government might review its capital regime. Foreign funds had fled the country after having been tied to the ringgit for a year under the country's limited capital control policy, he said.

As for Indonesia, the APEC declaration simply reminded the government to do its homework, which is to stick to the economic reform program.

The program's aim is to purge the country's economy of inefficiencies, which should lure foreign and domestic investment, while fortifying the economy from external shocks.

It also forms part of an agreement with the International Monetary Fund (IMF) to obtain financial aid.

Dradjad said old problems such as security and decentralization must also remain the government's priority.

Separately, senior economist at the Advisory Group in Economics, Industry and Trade (Econit) Hendri Saparini said the government had come to the APEC summit unprepared.

"The government had not fully utilized the opportunity to present its position during the APEC meeting," she said.

According to her, the government has yet to map out Indonesia's competitive advantages in global trade.

"All our industrial sectors are short of competitive advantage."

"Without us knowing where our strengths lie, we can't map out the competition or have a clear strategy," she said.

So far, she added, it remained unclear how Indonesia would cope with next year's ASEAN Free Trade Area (AFTA).

Given this situation, it would be difficult for Indonesia to remove trade barriers with APEC members, she said.

Commenting on the measures to revive the economy, Hendri advised the government to re-allocate its spending on sectors that drive economic growth.

"Conditions for next year have altered. Instead of foreign debt payments, we must allocate our spending more at home," she said.

That would call for the pushing of debt rescheduling talks in the upcoming meeting of the Paris Club of creditor nations.