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Illustration by Emilio Rivera III

Business Buzz
Growing Pains

Indonesia has an unusual problem: economic growth. In the final quarter of 1999 the economy surged by almost 6% and, while it has slowed in the first quarter of this year, it's still growing. The problem? Such figures have removed the pressure to push ahead with reforms. For example, Jakarta recently postponed a cut in fuel subsidies, even though subsidy-reduction was on the International Monetary Fund's "to do" list. "There was no sense of urgency," says Emil Salim, chairman of the National Economic Council. "Growth has been achieved in spite of the government." But the IMF, still bailing out Indonesia, has yanked the government's chain, delaying until May the next $400 million loan payment. "It's a wake-up call," says Salim.

Ministers say they can meet the new deadline, but the IMF may be appeased by signs that more reform is on the way. Already, President Abdurrahman Wahid has told his feuding economic ministers to get their act together. "This intervention by the president is very useful -- it creates a sense of urgency," Salim says. As well, a special anti-corruption team has been set up and new judges will be appointed to handle high-profile cases.

John Dodsworth, the IMF's senior Jakarta representative, acknowledges that Indonesia had to deal first with the political problems that followed the downfall of former president Suharto. But on the economic front, Dodsworth thinks "many people see that things were good before." That, he explains, is a dangerous misread. "Things were not good before. It was high growth with no foundation." Kusnanto Anggoro, an analyst with the Center for Strategic and International Studies in Jakarta, is more blunt: "The problem is ministerial politicking and no clear vision."

As Salim pleads for faster reform, he also asks for more understanding. In the Suharto days, economic decisions were made at the stroke of the strongman's pen. "It's a whole new ballgame," Salim says. Indonesia's financial umpire is now telling the team to play ball.

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