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.