Riots, looting worsen Indonesia's economy

JAKARTA (JP): The widespread riots and lootings in the capital over the past few days may further worsen the country's already weak economy, a top economic government official has said.

Coordinating Minister for Economy, Finance and Industry Ginandjar Kartsasmita said yesterday that a further plunge in the rupiah would certainly hurt the welfare of ordinary people because it would make prices of basic commodities more expensive since their production still required imported materials.

"The action outside the pro-reform movement has really harmed us," he told reporters last evening at a media conference after returning to Jakarta from a visit to Tokyo.

Following the shooting of four Trisakti University students at a demonstration Tuesday, Jakarta and nearby towns were spooked by riots and looting which resulted in the burning of many buildings and brought business operations to a virtual standstill.

Ginandjar explained that the international community welcomed the pro-reform student movement.

"The moral movement of the students has no negative impact on the rupiah, but action outside this would further weaken the economy and deal another blow to the rupiah."

He pointed out that when the government clinched an agreement with the IMF over the economic reform programs, the currency managed to stabilized at Rp 7,500 against the U.S. dollar. However, when violent riots hit Medan, the capital city of North Sumatra, the rupiah tumbled to Rp 9,000, while the riots in Jakarta forced the currency down to about Rp 12,000 to the dollar.

He said that because of the riots, investors from Taiwan and Japan had postponed investment plans in the country.

He also explained that although the IMF had not made any statement whether the unrest would cause a delay in the disbursement of its loan to Indonesia, it was clear that the government must wisely handle the incidents.

"I've expressed their concern to the minister of defense/armed forces commander," he said.

He said that because the riots had badly hit the distribution of basic needs in Jakarta, the government would provide a total of 125,000 packages of basic commodities today.

The government would also continue with its program to provide labor-intensive projects funded by Rp 1.5 trillion throughout the country.

Minister of Defense/Armed Forces Commander Gen. Wiranto had also assured him that the distribution of basic needs to the capital would run smoothly, he said.

"I've also talked to the president director of Pertamina (the state-owned oil company) to continue distributing fuel and kerosene," he said.

He added that as of today, the government would start market operations to stabilize the prices of basic commodities.

"I hope stores and markets which did not get burned can start doing business again," he said. (rei)