Testing the water

President Megawati Soekarnoputri hosted a special breakfast meeting with American business leaders in New York on Monday, as part of her itinerary during a visit to the U.S. to address the UN General Assembly, to brief it on the latest developments in Indonesia's overall situation.

She informed the businesspeople of the progress Indonesia had made thus far in managing its economic crisis and in treading the path of its transition to a decentralized, democratic government. She also told them frankly about a host of problems that had yet to be resolved to render the overall atmosphere more conducive to investment.

On the same day, chief economics minister Dorodjatun Kuntjoro- Jakti met with Malaysian businesspeople in Kuala Lumpur, also to discuss the prospects of investment in Indonesia now that the macroeconomic situation and political stability and security have been strengthening.

Earlier on Monday an Indonesian delegation, led by Minister of Finance Boediono and Bank Indonesia Governor Burhanuddin Abdullah, hosted a special session with around 30 international investors in Dubai on the sidelines of the annual joint meetings of the World Bank and International Monetary Fund (IMF).

They briefed the investors on what measures the government had taken and would take to fuel a stronger economic recovery and on the government's plan to reenter the international financial market next year with the issuance of bonds. Burhanuddin and a government team proceeded to New York and London with a similar mission.

These overseas missions should have been prompted by stronger confidence on the part of the government, brought about by the significant progress made in the economic, political and security fields over the past two years.

Buoyed by improved macroeconomic and political stability, the government seemed to feel that now was the right time to embark on a campaign to inform the international market of the latest situation. It is now high time to test market sentiment, sounding out investors' views on Indonesia.

Termination of the IMF program later this year made it essential for the government to assure the international market on its economic management after the end of the direct IMF oversight, and what would be the fate of the reform program.

It was indeed quite opportune that the information campaign and overseas business missions were made immediately after the launching of the government White Paper on the reform agenda the government will implement next year, after the IMF program has ended.

International creditors and investors, who had been worried about the post-IMF continuation of economic reform measures, had eagerly awaited the new reform agenda.

Even though some critics have attacked the new reform framework as being deficient in bold, innovative measures, it is still, at least on paper, quite credible as a new policy anchor on which international creditors and investors can base their perception of Indonesia's economic outlook.

Direct communication between Indonesia's policy- and decision- makers and international market players in general has become ever more imperative now that Indonesia will have general elections in 2004, with a new government to take over later next year.

International creditors and investors not only want to know about developments likely until next year but are also greatly interested in a benchmark to assist them to make a reasonable calculation of the business and investment risks that would be inherent in Indonesia under a new government.

This was the function of the direct communications that transpired during the meetings in New York, Kuala Lumpur and Dubai, especially when the dialog was candid, as in the meeting President Megawati had with American businesspeople.

International creditors and investors are fully aware of the complexity of the problems Indonesia has been encountering since 1998. They are rational enough not to expect immediate progress in all sectors. What they wish to see is simply small, but steady, progress in the direction of reform.

Direct communication through business meetings is one way of assuring the international market (creditors and investors) of what the future outlook of the Indonesian economy might be. Yet, the best indication remains the quality and pace of implementation of what is promised in the White Paper.