RI urges tighter control on global financial system

JAKARTA (JP): Indonesia has called for tighter control on inflows of offshore funds to avert another financial crisis in the future.

Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said on Wednesday that tighter monitoring of the inflows of offshore funds is needed to curb currency speculation, which often results in financial turmoil in a country.

The Asian financial crisis, which broke out in the middle of 1997, should become a good lesson for other developing countries, Ginandjar said in his speech at the Ninth Summit of the G-15 in Montego Bay, Jamaica.

The supervision of the international and domestic financial systems, as well as the inflows of offshore funds should therefore be strengthened to prevent the recurrence of an Asian- type crisis in other developing nations, he said.

"There is a strong need to establish greater transparency and more information on private fund inflows," he said in his speech, a copy of which was made available to The Jakarta Post.

Ginandjar said that other important measures would be to boost effective procedures for private sector participation in resolving and forestalling financial crises.

"This includes efforts to make creditors bear more fully the consequences of their actions," he said.

Moreover, there should be measures to discourage excessive reliance on short term financing while strengthening countries' capabilities of withstanding sudden shifts in market sentiment, he said.

"There is a need to promote orderly integration of international financial markets including capital account liberalization," he said.

Ginandjar said that recovery from the Asian financial crisis, which had adversely affected the global situation, was still long and winding and the prospects of the global economy in the next few years seem uncertain because the Asian crisis has begun to reveal its global character.

"But the Indonesian crisis has not only affected the economy but has also magnified our social tension and created political instability,' he said.

The G-5, holding its ninth summit in the Jamaican resort of Montego Bay, was set to bolster cooperation among developing nations and to provide input for other international groups like the World Trade Organization (WTO) and the Group of Seven rich industrialized states.

Members of the G-15 are Algeria, Argentina, Brazil, Chile, Egypt, India, Indonesia, Jamaica, Kenya, Nigeria, Malaysia, Mexico, Peru, Senegal, Sri Lanka, Venezuela and Zimbabwe. (aly)