Singapore to assist Indonesia

JAKARTA (JP): Singapore will give Indonesia financial assistance to help restore international market confidence in the country's economy, which has been hit by currency turmoil, Minister/State Secretary Moerdiono announced yesterday.

Moerdiono said that visiting Singaporean Prime Minister Goh Chok Tong and President Soeharto instructed their ministers to work out technical details of the agreed upon aid.

"The two leaders discussed the regional economic turbulence, particularly its impact on Indonesia," Moerdiono said in a prepared statement after the Goh-Soeharto summit yesterday.

Moerdiono said the Singaporean aid would be used to strengthen Indonesia's international reserves and to support the rupiah.

"Therefore, it can be understood that assistance will be in the form of money, and this will be separate from the aid package being negotiated with the International Monetary Fund," Moerdiono said.

The Singaporean prime minister's office also issued a statement yesterday summing up discussions between the two leaders, which also covered the upcoming summits of APEC in Canada next month and of ASEAN in Kuala Lumpur in December.

"The prime minister agreed with what the World Bank had said that Indonesia's fundamentals were sound," the Singaporean statement pointed out.

Goh also noted that effective market-oriented policies and actions by Indonesia since the beginning of the crisis would help it overcome present problems, the statement added.

The Singaporean leader, who arrived here Monday evening and held 75 minutes of talks with Soeharto yesterday, viewed the loss of investor confidence as a significant factor contributing to the weak rupiah.

"The priority now is to restore that confidence, and a successful conclusion to IMF discussions and prompt implementation of an agreed-upon package is key," the statement quoted Goh as saying.

Moerdiono said Singapore's assistance would be on a bilateral basis.

During the meeting, Moerdiono said the President briefed the prime minister on the state of problems now facing the country, the measures which have been taken and what measures are presently being considered.

"The President also briefed Mr. Goh on the ongoing discussions with the IMF," Moerdiono said.

When asked about the amount of money offered by Singapore, he said: "The amount of assistance, or whatever it will be called, must be large enough to enable us to regain and strengthen market confidence."

Southeast Asian currencies and stock exchanges have been under heavy pressure following the de facto devaluation of the Thai baht on July 2.

The rupiah has suffered the most since dropping by about 35 percent against the U.S. dollar, the Philippine peso by 26 percent and the Malaysian ringgit by 21 percent.

The usually strong Singaporean dollar is not exempt from the pressure.

"If I am not mistaken, the Singaporean dollar has also depreciated by 8 percent," Moerdiono said.

Soeharto decided early this month to call in the International Monetary Fund to help restore confidence in the Indonesian economy.

In a related development, Soeharto received IMF's Asia-Pacific Director Hubert Neiss last night at his residence on Jl. Cendana, Central Jakarta.

Neiss is one of the architects of a 17.2-billion dollar bailout for Thailand's troubled economy in August.

According to Moerdiono yesterday, IMF and Indonesian officials will most likely conclude their negotiations before the end of this week.

"The IMF board of directors in Washington is scheduled to meet later this month to decide on their aid plan for Indonesia," Moerdiono said.

Analysts predicted yesterday that Indonesia could expect a maximum US$10 billion in a IMF-sponsored aid package. (prb)

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