U.S. senator upbeat about RI economy

JAKARTA (JP): United States Senator Max Baucus said here yesterday he was optimistic that Indonesia would be able to weather the currency crisis if it fully implemented its reform package.

Baucus said the currency crisis, which has led to the fall in the rupiah's value against the U.S. dollar by over 50 percent since early July, was mainly caused by a rumor-aggravated market.

"Much of what's going on now is psychological," Baucus told journalists at the start of his three-day visit to the country.

Concern over the financial crisis in other countries such as South Korea also affected public confidence in the Indonesian economy, he said.

Baucus, a Democrat from the state of Montana, said the condition could only improve if Indonesia soon implemented the economic reforms agreed to with the International Monetary Fund (IMF).

The Indonesian government recently issued economic reforms consisting of massive cutbacks in the state budget and state- related projects, the consolidation of the financial sector and the abolishment of monopolies of certain important commodities to support the US$23 billion IMF bailout program.

The sooner Indonesia committed to the reforms, including the restructuring of its finance institutions, the sooner investors would return to the country, he said.

Baucus said the United States would back Indonesia to do what was necessary to help restore confidence in the country.

"I am here also to reconfirm the U.S. commitment to the region, particularly to Indonesia," he said, adding that the U.S. would continue helping Indonesia through independent institutions such as the IMF.

Baucus, who is leading a trade delegation comprising of 12 businessmen from Montana, said the United States still saw Indonesia and other countries in Southeast Asia as prospective business partners despite the crisis.

"We are more interested in the Asia-Pacific region than in Europe," he said.

Indonesian ambassador to the United States, Arifin Siregar, said yesterday Indonesia remained one of the 10 preferred trade partners of the U.S. government.

"Indonesia is considered by the U.S. trade ministry as one of the best countries for trade," Siregar told a luncheon, hosted by the Indonesian Chamber of Commerce and Industry (Kadin) for Baucus and the Montana trade delegation.

The U.S. market was a target for exporters, since America's economy was sustaining high growth, low inflation and a higher purchasing power, he said.

He said the depreciation of the rupiah had also made Indonesian exports more competitive in the U.S. market.

Siregar said many U.S. investors were interested in investing in infrastructure, power plants, telecommunications and transportation in Indonesia.

Tony Agus Ardie, Chairman of the committee, conceded Indonesia had to work harder to regain the confidence of foreign investors, notably those from the U.S.

"American investor interests in Indonesia have been declining since the outbreak of our financial crisis," Tony admitted.

Baucus said Montana, a northwest state with a population of 900,000, was interested in cooperating with Indonesia in environmental technology, and the livestock, wood products and energy industries.

Montana was specifically interested in entering the country's environmental technology sector, such as water and waste management, as the sector had yet to be developed in Indonesia, he said.

"Dollars invested in environmental technology is not an expenditure, it's an investment. It helps raise the quality of life and eventually the country's economy," he said.

Baucus and the trade delegation arrived here Tuesday after his visit to Japan, the Philippines and Brunei. He is scheduled to leave for Bangkok today. (das)