Mon, 26 Jun 2000

Sjahrir says RI economy could grow by 6% this year

JAKARTA (JP): Despite the bleak political environment, Indonesia's economic growth this year could reach 6 percent as the country's real economy has been growing rapidly during the past few months, according to noted economist Sjahrir.

Sjahrir said here over the weekend that political fighting among the elite may escalate, but real economic activities would continue to blossom, and new businesses would continue to emerge as there were no more barriers in sight.

"We all may say that Gus Dur (President Abdurrahman Wahid) is a fool, but the economy can grow by 6 percent this year. That can happen because the real economy is growing fast.

"It can be seen from the growing exports, the growing imports and even from the growing businesses of Internet cafes. All real businesses are growing," he said at a media education seminar held by Internet company.

The real economy has been moving forward rapidly despite the slow rebuilding of the country's banking industry. Companies and the people will continue doing business, even though they have to do it in cash, he said.

"The amount of money in circulation may not grow significantly, but the velocity of money movement has been increasingly getting faster and faster," he said.

Sjahrir noted that economic growth this year would be especially driven by exports and imports, especially of capital goods, expanding domestic consumption and the unprecedented rapid growth of information technology-based businesses, including the Internet.

According to the Central Bureau of Statistics, the value of exports in the January-April period increased 35.93 percent to US$19.10 billion over the same period last year. And imports reached $8.85 billion, a 15.24 percent increase compared to the same period last year.

Meanwhile, raw material imports in the January-March period increased by 19.69 percent to $4.99 billion compared to the same period last year. Imports of capital goods jumped by 21.36 percent during the period.

Sjahrir noted that the soaring exports, the expanding importation of raw materials and capital goods indicated the rapid growth of real economic activities in the country.

Meanwhile, domestic consumption had also grown rapidly after one and a half years of the crisis, which started in July 1997.

And the growth of information technology-based businesses, especially Internet businesses, has been astounding due to the freedom given to investors to enter whatever new businesses they want.

"Now we can establish whatever company we want without being required to form a partnership with Mbak Tutut or Mbak Titik. If we have money and want it, we can just start it," Sjahrir said, referring to daughters of former president Soeharto.

"That's the benefits of reformasi (reform) that people often forget," he said.

As those in the real sector can now do business freely without much intervention from the government, any political movement in the country does not greatly influence business activities.

A planned Cabinet reshuffle, or even bad policymaking by certain departments or state institutions will not influence economic activities.

"Whoever becomes the chairman of Bapepam (the Capital Market Supervisory Agency), whoever becomes the finance minister, that doesn't matter at all for the real economy. That's totally irrelevant to the real economy ... All economic activities will continue going," he said.

However, Sjahrir warned that the real economy would continue to grow and would not be affected by any political movement as long as "Indonesia does not return to being a military regime".

"Once we return to being a military regime, we will all die," he said. (rid)