U.S. wants market-oriented policy

JAKARTA (JP): United States Ambassador to Indonesia Robert Gelbard expects the Cabinet's new economic team to adopt a market-oriented economic policy to attract investment.

Gelbard said on Friday investment was crucial for the country to create more jobs and achieve a sustainable economic recovery.

"We want to see a market-oriented economic policy and I feel very confident that Rizal Ramli will lead Indonesia in that direction," he said, referring to the newly appointed coordinating minister for economic affairs.

Gelbard was speaking to the media after meeting with Rizal at the office of the State Logistics Agency (Bulog), which Rizal still heads.

"It is going to be very important for Indonesia to develop a strong open investment climate," he said, before adding, "Our companies are very interested in investing in Indonesia."

Gelbard welcomed the appointment of Rizal and the other economic ministers, and said the U.S. government would support the new economic team. "I think this will be a good economic team. We'll be supporting them."

"I've known Rizal Ramli for quite sometime. My colleagues and I have a great deal of respect for him. I think his selection was an excellent choice."

Gelbard also said new Minister of Finance Prijadi Praptosuhardjo would be a fine minister, adding that he had earlier met with Prijadi.

The International Monetary Fund, the World Bank and the Asian Development Bank earlier expressed their support for the new economic team.

President Abdurrahman Wahid announced his new Cabinet on Wednesday, and the lineup is expected to be sworn in on Saturday.

The immediate response of the financial market to the new Cabinet was negative, particularly its view of the new economic team.

Analysts said the main source of controversy was the appointment of Prijadi, a long-time friend of Abdurrahman who failed a central bank fit-and-proper test when earlier nominated to head state Bank Rakyat Indonesia.

The market also is concerned by the fact that all of the key members of the new economic team are loyalists of the President, raising speculation this would create a problem between Abdurrahman and Vice President Megawati Soekarnoputri, who chairs the Indonesian Democratic Party of Struggle (PDI Perjuangan), the largest party in the legislature.

Other major political parties also were left out of the new Cabinet. Some analysts have said the new economic team will have difficulty dealing with legislators from the major parties.

The head of the House of Representatives Commission IX for the budget and banking, Sukowalujo Mintorahardjo, echoed this view.

"I imagine that legislators will take a hard line toward the new economic team, including those (legislators) from the Axis Force, Golkar Party and PDI Perjuangan," he said.

Sukowalujo said the key to the success of Abdurrahman's administration lay in the hands of the new economic team.

"If they fail, it could trigger a demand for the legislators to hold a special session (of the People's Consultative Assembly)," he said.

Legislators can move to impeach the President in a special session.

Sukowalujo also said the market had a negative perception of the new Cabinet, particularly Prijadi, who had been rejected by the market.

He said if this perception continued, the Indonesian Bank Restructuring Agency would have difficulty selling the assets under its control to help finance the state budget.

Meanwhile, Rizal met with Megawati at her house on Friday to discuss steps to be taken to achieve economic recovery.

The President is expected to issue a decree on Saturday handing over the day-to-day running of the government to Megawati. The Vice President will be assisted by two coordinating ministers -- Rizal and Coordinating Minister for Political, Social and Security Affairs Susilo B. Yudhoyono.

"We discussed the need to increase the number of meetings between the coordinating ministers and the Vice President, and also with the President," Rizal said following the two-hour meeting.

He also said Megawati agreed to work with the new economic team to accelerate the country's economic recovery.

Separately, the director general of financial institutions at the Ministry of Finance, Darmin Nasution, said Prijadi had a difficult job because there were several issues that needed to be completed immediately.

"This is a difficult time," Darmin said.

He said among the pressing issues was the preparation of the 2001 state budget, which must be debated by the legislature beginning next month, and the fiscal decentralization policy to be implemented in January next year.

Darmin also said the new finance minister would have to work out plans to swap the performing loans under the Indonesian Bank Restructuring Agency with government recapitalization bonds in commercial banks in a bid to reduce the burden on the state budget.

The government issued bonds to finance the bank recapitalization program, and the state budget will cover the interest rate of the bonds. (rei)