Jakarta’s new economic council will lure investors, say analysts
FINANCIAL TURMOIL
* BIG STEP ———-
PRESIDENT Suharto’s announcement that he would head a high-power economic council to oversee reforms backed by the International Monetary Fund (IMF) in Indonesia will be a major confidence boost for foreign investors, analysts said yesterday.
“Many complain that there is no leadership in the economy,” said Mr Umar Juoro, a senior economist at the Centre for Development and Information Studies.
“With Mr Suharto creating and taking charge of this new board, it gives the reforms a measure of credibility and a big step towards getting more investments into the country.”
Mr Suharto announced the establishment of the Council for Economic and Monetary Resilience on Thursday along with sweeping reform measures aimed at pulling Indonesia out of the economic abyss.
He will head the council with senior economist Widjojo Nitisastro as secretary-general along with nine other members from the monetary council and private sector.
The board will review the implementation of economic policies every three months with a senior IMF representative in Jakarta.
Observers believe that Mr Suharto’s selection of Mr Widjojo as secretary-general over active ministers in the board was an indication that the President was unhappy with their management of the economic crisis.
Mr Widjojo is a former Cabinet minister.
Mr David Chang, Research Director of Trimegah Securities, noted: “There are respectable people in the board to tackle the country’s problems now.
“If the council cannot implement the reforms, Mr Suharto has to accept personal responsibility.
“So a lot is at stake not just for the country, but the President as well.”
Mr Juoro said that the formation of the council was a “historic decision” given that there was no precedent in the country.
“This is very significant and a reflection of how serious a problem this is,” he said.
Professor Mohamad Sadli, a prominent economist and former Cabinet minister who held various economic portfolios from 1967 to 1978, said that the current predicament in Indonesia was similar to that of 30 years ago.
“Then we were under World Bank supervision,” he said.
“Now it is the IMF which has a senior representative here to advise the council.”
He noted that the presence of the senior IMF official will ensure that the reform package will not be a “paper tiger”.
Referring to the autonomy given to Bank Indonesia as an example, he said: “It will now have the power to say even ‘No’ to the President and his children.”
He likened the powers given to the central bank to that of the Monetary Authority of Singapore.
Some analysts, however, adopted a less than sanguine view.
Said Mr Chang: “This is the first time it is on paper and it looks very good.
“But there are question marks on whether it will be effective given so many vested interests.
“So we will have to wait and see.”
THE MEMBERS
* President Suharto * Senior economist Widjojo Nitisastro * Mr Ginandjar Kartasasmita, State Minister for Development Planning * Mr Saleh Ariff, Coordinating Minister for Economy and Finance * Mr Mar’ie Muhamad, Finance Minister * Mr Tunky Ariwibowo, Trade and Industry Minister * Mr Moerdiono, State Secretary * Mr Sudradjad Djiwandono, governor of Bank Indonesia * Mr Fuad Bawazier, director-general of taxation * Mr Tanri Abeng, president-director of Bakrie Brothers.
