Indonesia at a critical juncture, says panel

By Amit Baruah

SINGAPORE, FEB. 20.A four-member international panel of advisors to the Indonesian President, Mr. Abdurrahman Wahid, has said that Indonesia was poised at a ``critical juncture''.

In an aide memoire submitted to the President, Singapore's Senior Minister, Mr. Lee Kuan Yew, the former U.S. Federal Reserve chief, Mr. Paul Volcker, a retired Japanese diplomat, Mr. Nobuo Matsunaga, and a German banker, Mr. Ulrich Cartellieri, were forthright in pointing out the country's problems. Indonesia, the advisors said after a visit to the country, must build on a year of promising but still highly fragile and incomplete economic recovery. ``That effort would be surely jeopardised - indeed made fruitless - by failure to address certain issues, some chronic, some new,'' the advisors said.

``You (a reference to the President) will not be surprised that time and again we are told that economic progress and reform are impeded by a sense of pervasive cronyism and corruption. In that respect, much emphasis has been placed on the key importance of reform in the system of justice, and especially administration of courts. In any country, dealing with such problems would require long and sustained effort. What seems essential is that you signal to the country in unmistakable terms the necessity of undertaking the effort,'' the report said. Referring to the implementation of the IMF programme for Indonesia, the advisors said the administration of such a programme was ``seldom or ever free of contention and friction''. ``Indonesia is not an exception in that respect. However, success will be valuable in supporting confidence at home and abroad. The payoff, we are convinced, will be greater investment, sustained growth, and rising living standards,'' they said, urging Mr. Wahid to take the IMF route.

``Implementation of monetary and fiscal policies is always subject to review in the light of new conditions. However, our sense is that the broad outlines of the agreed approaches remain appropriate....close IMF supervision of those programmes should be welcomed as a counterweight to political or special interests that tend to impede or frustrate even-handed treatment of investors....''

``We recognise, Mr. President, that some might suggest that Indonesia deal with these and other concerns without the frustrations inherent in IMF agreements and surveillance. We would urge that you consider very carefully the clear risks of such an approach, risks that range far beyond the loss of immediate financial and budgetary assistance. The symbolism of such a decision to go it alone would be powerful. The already fragile confidence of markets and investors, domestic and foreign, would certainly be shaken, undercutting the progress towards stability and growth,'' they said.

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Section  : International
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