U.S. wants market-oriented policy

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)