WB sympathizes with govt over slow pace of reform

WB sympathizes with govt over slow pace of reform

JAKARTA (JP): The World Bank country director for Indonesia,
Mark Baird, has apparently taken sides with President Abdurrahman
Wahid over growing criticism against the government's economic
policy.

Speaking at a business lunch with the Indonesian Chamber of
Commerce and Industry (Kadin), Baird said most criticisms were
focused on the government's weaknesses while ignoring its
economic achievement.

"This political pressure has compounded the difficulties of
economic policy-making, leading to slippages in implementing the
reform program," Baird said during the luncheon, which
International Monetary Fund (IMF) representative John R.
Dodsworth had also joined.

Baird said criticism coming from demands for more economic
empowerment, opportunity and accountability had outstripped the
government's capacity to deliver the expected reforms.

He said the newly obtained democracy had generated high
expectation and increased debate on the country's economic
direction.

He said in this political environment it would be unreasonable
to expect the implementation of economic policies would run as
smoothly as they would under the strict governance of former
president Soeharto.

"I often hear investors lamenting the good old days -- when
policy was predictable and you knew who to talk with to fix a
problem," he said.

Baird urged investors to be patient as the present uncertainty
was the inevitable result of Indonesia's new democracy.

He said criticisms against the government often neglected
improvements in other economic fields.

"Economic policy has stayed largely on track. Structural
policies have been guided by the comprehensive reform program
outlined in the letter of intent with the IMF," he explained.

The government was maintaining a conservative budget position,
while Bank Indonesia had kept monetary policy under control, he
said.

Baird praised the governments of former President B.J. Habibie
and his successor President Abdurrahman Wahid for having managed
to stabilize Indonesia's macroeconomy.

He said since the economic crisis in 1997, the government had
managed to control inflation and raise the Gross Domestic Product
(GDP) growth rate to over three percent last year.

However, he said, the government still needed to restore the
country's investment climate, which, among other things, was
tainted by deteriorating law and order, corruption cases and
questionable bureaucratic quality.

"Investors are looking for some indication of the government's
game plan -- a strategy which provides a sense of direction to
the reform effort and a way to measure its progress," he added.

Baird said the slow progress of implementing the reforms was
most evident in the asset sales by the Indonesian Bank
Restructuring Agency (IBRA), the privatization of state-owned
enterprises and the restructuring of state banks.

The government expects to raise Rp 6.5 trillion (US$755
million) for the April-December state budget from the
privatization of 10 state companies.

Meanwhile, IBRA is expected to raise Rp 18.9 trillion from the
sales of its assets, which total some Rp 600 trillion.

At the same forum, Dodsworth said the government should push
ahead with its privatization program and the sale of IBRA's
assets.

"It's a little bit slow so we need to accelerate that,"
Dodsworth said in reference to the privatization program.

Asked whether this year's privatization could meet its target
of Rp 6.5 trillion, he said the potential was there.

"The minister has said he'll meet the target, so I think we
have to take it on face value," he said of the optimism expressed
by State Minister of Investment and State Enterprises Development
Rozy Munir on the privatization program.

Dodsworth said despite the present sluggish market, the
government did not need to revise the target.

Commenting on the sales of IBRA assets, he said selling the
assets now could help lift market sentiment and improve the value
of future sales.

Kadin chairman Aburizal Bakrie also suggested the government
sell IBRA assets now despite the present market condition.

"Don't wait until the market improves. What if it doesn't? How
are we going to pay our debts?" he said.

Once the government decides to sell its assets it must act
firmly on its decision, regardless of the criticism, he said.
(bkm)