Suharto glad polls drive has not hurt economy

PRESIDENT Suharto has expressed satisfaction that the current election campaign has not affected the Indonesian economy adversely.

“The economic situation is stable. The election campaign did not even affect the capital market,” Information Minister Harmoko quoted the President as saying during a Cabinet meeting on economic affairs.

Mr Harmoko said that the country’s inflation rate now was lower compared to the same period last year. Inflation was 0.56 per cent last month compared to 0.78 per cent in April last year.

He said that the rate from January to April this year averaged 2.52 per cent, much lower than the 4.04 per cent recorded over the same duration last year.

In a move to curb price speculation and keep inflation rates down, he said that Mr Suharto had instructed the chairman of the National Logistics Affairs Bureau, Mr Beddu Amang, to flood the market with basic commodities.

Observers here said that Mr Suharto’s comments, which came after a spate of riots in the country, were aimed at reassuring businesses – foreign and local – of Indonesia’s economic credentials.

Mr Winarto, the President-Director of Indonesia Growth Fund, an international venture capital, told The Straits Times yesterday that investors were staying on the sidelines because of the uncertain political climate.

“It is a fact that they are keeping a lower profile now. What the President has done is to send a signal to these people that Indonesia is still a safe place to put their money,” he said.

Gemala Group chairman Sofyan Wanandi said that local businesses were jittery and concerned about incidents that might occur during and after the polls.

“If people, don’t accept the results or are unsatisfied, they could be restless. This could cause them to direct their anger at businesses,” he said.

He said that large companies had already taken precautions by listing their companies on stock exchanges, establishing joint ventures with foreign firms and moving their capital out of the country.

“These steps help reduce the risks,” he added.

Unlike local companies, foreign investors were less apprehensive of doing business in Indonesia during the hustings.

A report in the Jakarta Post last week said that while foreign investors were concerned about some volatility on domestic and financial markets, they had confidence in the government’s economic policies.

Analysts believe that Indonesia’s economic fundamentals will remain sound despite occasional ripples on the political landscape, with some even predicting an 8 per cent growth this year. Indonesia registered a 7.82 per cent growth rate last year.

Mr Harmoko said during the meeting on Wednesday, which was chaired by Mr Suharto, that the country recorded a surplus of US$6.8 billion (S$9.52 billion) from April 1996 to February this year. The government had also earned US$20.38 billion in foreign exchange.

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