Wednesday, Oct. 1, 1997
Staff writerDespite the gloomy cloud hanging over Southeast Asian economies following the recent currency turmoil that began in Thailand, the Indonesian government is on the right track in implementing a wide range of measures to shore up its economy, according to Hartarto, Indonesia's coordinating minister for production and distribution.Although he admitted the devaluation of the Thai baht has affected his country's economy and the value of the rupiah, Hartarto said exporters are taking advantage of the situation. "You can directly see (the improvement) in the balance of our trade. Imports are diminishing and exports are increasing, and it's a good sign," he said in an interview with The Japan Times. Indonesia's exports in fiscal 1996 stood at $52.2 billion, while imports posted $50.8 billion, producing a trade surplus of $1.4 billion.Hartarto, who was visiting Japan for the Asia-Europe Meeting of economic ministers last weekend, said Indonesia's Ministry of Trade and Industry is considering new incentives to further encourage exporters. The minister, whose country boasts the world's fourth-largest population, also expressed confidence in its economic fundamentals, stressing that the country is making continuous efforts to implement deregulation.He said the government is currently in the process of privatizing state enterprises, and part of the revenues from this will be used to repay mounting foreign debts. Indonesia's foreign debts, a major factor threatening the country's economic growth, stood at around $110 billion last year. "In the long term, it will also increase more tax revenues," he said.In the belt-tightening effort to maintain a balanced budget, Jakarta has also announced delays in major government-related projects worth 39 trillion rupiah ($13.22 billion) and reviews of projects worth about 63 trillion rupiah ($21.33 billion) in September.However, Hartarto said that Indonesia's inflation rate, which has been declining in recent years, may turn around next year. The country's inflation rate declined to 6.5 percent in 1996 from 8.6 percent in 1995, and dropped to 5 percent in the first half of this year. "Inflation is currently under control, but it will probably go up next year," Hartarto said.He said that foreign investment has not been discouraged so far, but domestic investment is slowing down because of the country's relatively high interest rates. Hartarto also touched on the importance of developing supporting industries to ensure sustainable growth, adding that the country especially needs to strengthen its electronics industries.