Efficient govt revived economy : Habibie

INDONESIA IN TRANSITION

President Habibie says the battered Indonesian economy is picking up, thanks to the policies he has instituted since he took office last May.

A CONFIDENT President B. J. Habibie said that Indonesia was on its way to economic revival due to an “efficient and pragmatic” government and that his policies had prevented the country from heading down the path of the former Yugoslavia.

“How is it that today, one dollar is worth about 7,500 rupiah and not 20,000 as the people had predicted, while I was Vice-President, if I were ever to become the President of the country?” he asked the Hongkong-based Asian Affairs journal in an interview recently.

He spoke at length about “simple and elementary principles” to resuscitate the battered Indonesian economy.

His immediate priority on assuming office in May last year, he said, was to strengthen the rupiah that had been devalued by more than 70 per cent.

He said this was achieved by creating a “strong monetary authority” independent of government control.

He said: “I split Bank Indonesia from the government. I cut it off immediately so that it would no longer be a matter of discussion.

“I told the members of the Cabinet not to influence Bank Indonesia and its dealings with the IMF and I told the governor not to be influenced by anyone. I told him he had three years to create a respectable rupiah.”

The next thing Dr Habibie did was to “build a social safety net” by subsidising small- and medium-sized firms that made up 99 per cent of the economy and employed 88 per cent of the workforce.

“Monopoly is wrong in essence. I looked at the distribution system and I broke it up,” he said.

“I started a relaxation process. To relax everything will lower the cost in politics and economics.”

He said because of these policies, Indonesia was experiencing an “economic revival although the economy is far from normal”.

The “reality is totally different” today, he stressed.

* The rupiah had strengthened to 7,500 from 15,000 before he took office.
* Inflation had lowered considerably from 62 per cent in May to 1.42 per cent in December.
* The stock market was making a comeback.
* There was no longer a monopoly of food supplies.

Using the analogy of a pilot on board a damaged plane, he said it took him six months to regain control of the aircraft.

“If I had not done it, today Indonesia would be like former Yugoslavia,” he said.

“We were able to overcome the problems and prevent the implosion of the country … If that happened, this region would be the most destabilised and critically wounded in the world.

“The negative effect of more than 200 million people tearing each other apart would easily have unbalanced the 600 million other people in the region.

“In spite of everything, we made it.”