Habibie confident of reviving economy
INDONESIAN ELECTION ’99
Buoyed by the way the economy has stabilised since he took over in May last year, he is optimistic of bringing down inflation and interest rates.
AMONG the targets which President B. J. Habibie has set in reforming and reviving Indonesia’s ravaged economy are single-digit figures for inflation and interest rates.
He told The Straits Times in an interview over the weekend that he was confident these could be achieved in two years. What gave him cause for optimism was the way the economy had stabilised since he took over the reins of government in May last year, when the rupiah was in a free fall and confidence had collapsed.
It became clear quite quickly during the interview that he took immense pride in the recovery of the rupiah, which, at one point, had lost 70 per cent of its value against the US dollar, and in the now vibrant Jakarta Stock Exchange which was all about dead 13 months ago.
He attributed the rebound in large part to certain key decisions which he said he took right at the beginning of his presidency – freeing the central bank, the Bank of Indonesia, from interference by the Finance and other ministries, dismantling monopolies and deregulation.
He said he handled economics as he did politics – opening it up to competition, making it transparent and allowing market forces to decide, within macro-economic constraints, of course.
He was adamant, however, that the Indonesian economy must be built on the back of small and medium private enterprises (SMEs), rather than just conglomerates, as the former would provide jobs, keep inflation down and help provide long-term growth.
“SMEs will act as a network and safety net to catch the free fall of our national economy,” he said, adding that it was the conglomerates that had landed the country in a huge debt problem.
He said that future development plans would give greater leeway to private enterprises to take over economic projects, while the government concentrated on developing human resources.
The key approach in economic policy-making would be to grant autonomy, as much as possible, to as many sectors of a market-oriented economy as possible.
And this market-oriented economy would operate in a reformed democratic political environment. There would be synergy, he promised.