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."