RI to pursue reforms despite 2004 election

RI to pursue reforms despite 2004 election

Eileen Ng, Agence France-Presse, Kuala Lumpur

Indonesia on Tuesday pledged to press on with economic and
structural reforms despite preparations for general elections due
in mid-2004.

Finance Minister Budiono told the World Economic Forum's East
Asia Economic Summit here that current policies of fiscal
consolidation and structural reforms had yielded positive results
and were crucial to sustain economic recovery.

"Economic growth is accelerating, inflation and interest rates
are on the way down and the national debt burden is falling. Our
commitment to macro stability is paying off," he said.

"We are determined to press on with the policies that have
worked thus far while pushing forward with more vigor on...
structural reforms.

"We would like to consolidate these gains as we prepare for a
new round of national elections in mid-2004 as we continue our
transition to democracy."

Indonesia's economy grew three percent last year, and the
government forecast growth of around four percent for 2002 and
five percent in 2003.

Analysts earlier voiced fears the economic reforms could be
thrown off track amid preparations by President Megawati
Sukarnoputri's government for the 2004 polls.

"We are all ready and almost in pre-election mode in
Indonesia. There is a risk of economic policy going into still
mode while politicking goes up," Adam Schwarz, senior consultant
at McKinsey and Co. in Indonesia, told the summit.

Over the next few years, Budiono said Indonesia would put in
place "very large amounts of infrastructure" to catch up with
shortfalls created by the 1997-1998 Asian financial crisis and
for future growth.

"We are now moving ahead to improve pricing and put in place
improved regulations by pressing ahead with critical
infrastructure and perhaps especially electricity is now a very
high priority," he said.

The sale of assets by the Indonesian Bank Restructuring Agency
was "on track" for completion by September 2003, he said.

Budiono said the government would overhaul its tax system and
may cut high corporate taxes after the 2004 polls to boost
competitiveness and spur investment which currently stood at 20
percent of gross domestic product, down from 30 percent before
the crisis.

But he acknowledged weaknesses in the legal system, saying
there was an "urgent need for further reform in the area of
commercial law and related areas."