Indonesia still hanging on to hope

Business Asia, Sept 21, 1998

Policy changes and a willingness by Indonesia's new leadership to tolerate dissenting views gives the troubled nation a chance of recovering from financial and social turmoil, according to Indonesia's State Minister for National Development Planning.

Dr Budiono, the first Indonesian minister from the new Habibie Government to visit Australia, admitted that Indonesia was at the crossroads.

However, he said the "overall climate" of economic policymaking had changed dramatically in the past year.

"You can argue with the President (now), something you could never do in the past," he said in reference to the autocratic style of former President Suharto.

Dr Budiono, who is rumoured to become the governor of Bank Indonesia - the nation's central bank - said his country's immediate future was unclear.

"Indonesia at the moment is at the crossroads and I think the next year or so ... will determine which road we'll take," he said.

The Minister took hope from the Government's tentative steps toward democratisation and said next year's elections would be a watershed in the nation's history.

Dr Budiono defended the delay to national elections, saying time was needed to prepare the nation for a "proper democratic election".

Speaking at an Australia Indonesia Business Council breakfast in Sydney, Dr Budiono said the banking sector was committed to reforms and agricultural output would improve this year.

He said the impact of El Nino weather patterns meant 1997's agricultural performance had been the worst yet, and had compounded Indonesia's financial and social problems.

Prime Minister John Howard met Dr Budiono during his Australian visit to discuss aid for Indonesia's economic recovery program.

Analysts have given a cautious welcome to last week's memorandum of agreement updating Indonesia's progress in reforming its battered economy.

The agreement was the latest instalment of commitments and target reviews made between Indonesia and the International Monetary Fund under the terms of its US$47.4 billion economic rescue package.

It revealed a mixed bag of measures to curb skyrocketing rice prices, revisions to performance targets and confirmation that privatisation receipts were likely to be below forecasts because of Indonesia's depressed financial markets.

Rice, the staple food of Indonesia's 200 million people, has become the pivotal political issue in Indonesia in recent weeks and has been the focus of anti-government student demonstrations. - Business Asia, Reuters