RI starting to gain from economic reforms: Minister

RI starting to gain from economic reforms: Minister

SINGAPORE (Agencies): Indonesia is beginning to reap the
benefits of its economic reforms, Trade Minister Luhut Binsar
Panjaitan said here Tuesday, urging investors not to be
distracted by violence wracking the country.

In a briefing to business leaders, Luhut said Indonesia had
revised its growth forecasts upwards, as the benefits of reforms
undertaken after the 1997 Asian financial crisis began to kick
in.

"Although these policies have in the short-term caused strains
on our economy, the benefits are beginning to come through," he
was quoted by AFP as saying.

"This does not mean that I intend to ignore the number of
problems faced by my country but these problems should not
eclipse the opportunities that continue to exist in Indonesia."

The upbeat message contrasted with outside opinions, such as a
recent Asian Development Bank warning that rising government
budget deficits and debts threatened Indonesia's economic
recovery.

International Monetary Fund chief Horst Koehler last week
urged Jakarta to accept the need for an independent central bank
which would be "important for stabilising the confidence of
private markets."

Luhut, in Singapore to update potential investors on
Indonesia's economic progress, said Jakarta now expected final
figures for last year to show growth of 4.8 percent, well up on
initial forecasts of 4.0 percent, with inflation at 9.2 percent.

In the first 11 months of 2000, exports were up 26 percent on
the previous year, he said.

The healthy economic report card was achieved through the
government's commitment to undertake the necessary economic
medicine even at a time of great social change taking place in
the country, Luhut said.

"Faced with these challenges, our government has remained
steadfast in avoiding short-term fixes and instead we have
focused on implementing policies that would bring major and long-
term benefits," he said.

"Quite apart from nurturing a fledging democracy, Indonesia
has also had to maintain religious harmony in a country of great
diversity during a period of social uphill resulting from the
economic recession," he said, referring to rising separatist
movements and sectarian unrest in the country.

Coffee

Separately, Luhut said that Indonesia has to be pragmatic on a
global coffee retention plan as the retention would cost the
country more than it could afford.

The minister told Dow Jones Newswires Tuesday that while
Indonesia fully supports the retention program and wants to see
higher prices for farmers, it has to be realistic because the
cost of retaining coffee could cost the country as much as US$7
million.

"We would like to increase the price... but we have to also be
pragmatic, realistic because we have to spend quite a lot of
money for the retention," he said.

The minister was in Singapore Tuesday for a meeting with
members of the American Chamber of Commerce.

Indonesia has repeatedly said it was keen to join the
retention, as part of a plan by the Association of Coffee
Producing Countries to drive up prices, but has been unable to
come up with any concrete plans due to a lack of funds.

Last week, Luhut said Indonesia plans to hold back 8,000
metric tons of coffee every quarter, but he didn't detail how it
will finance the plan or when it will begin doing so.

The Association of Indonesian Coffee Exporters is expected to
meet Thursday to finalize details on the country's retention plan
ahead of a producer meeting in London Jan. 24.

Under the ACPC plan adopted last May, 20 percent of global
exports will be withheld until prices rise to 95 U.S. cents a
pound, as calculated by the 15-day moving composite indicator of
the International Coffee Organization.

That indicator stood Monday at 47.72 U.S. cents/pound.

Vietnam last year replaced Indonesia as the world's largest
producer of robusta coffee.