Indonesia expects global support funds from G20

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(Xinhua)
Updated: 2009-03-19 17:04

JAKARTA -- Indonesia needs global support fund to revive its economy and to become one of the world's growth engines, like other developing markets. Therefore it expects to gain loans at the G20 summit which will be held in London starting April 2, 2009, according to Indonesia's economists.

"In short, Indonesia needs loans," Aviliani, an economist at the Institute for Development of Economics and Finance (INDEF), stressed during an exclusive interview with the Xinhua reporter on Tuesday.

The expert said that amid the current crisis, Indonesia needs fund badly to reduce the high unemployment and help the failing enterprises. So, the country should use the moment of the G20 meeting to ask for the fund.

The chairman of the Indonesian Employers Association Sofyan Wanandi said the summit should result in ways to disburse loans to Indonesian private industries or to the government's budget which in turn will boost the economic activities. With the money, companies and the government could create more jobs.

Meanwhile, private companies also need to roll over theirs debt due to the prolonging financial crisis.

Earlier, Indonesia's Finance Minister Sri Mulyani Indrawati said that Indonesia will propose talks on private companies' debt rollover in the summit. The minister said that the risk faced by private sectors in emerging markets, including Indonesia, was due to inability of European and American banks in disbursing loans. Private sectors need new loans to repay older debt, but they can not get these loans now because the American and European banks are facing a financial crisis.

On the other hand, Indonesian Foreign Minister Hassan Wirajuda said that Indonesia would again propose the global expenditure fund scheme, which it once introduced at the Washington summit. He said the global expenditure fund would allow all countries access to it to revive their real economic sectors.

"We will struggle to get the concept adopted as a joint effort of international community to tackle the crisis," Hassan has said.

But a former official in the era of President Soeharto and President BJ Habibie totally disagreed if the Indonesian government asked for other loans at the G20 forum. Former Finance Minister Fuad Bawazier said the Indonesian government should stop borrowing from overseas. Like other contra-government economists, Fuad said that the more Indonesia is indebted to overseas, the more burden the country has to bear.

"The country should maximize its potency to survive," he said. That's why Fuad also opposed the government's intention to seek the private sector's debt rollover at the G20 summit.

"Besides, that's not the government's business. Let the government concern with its own business," he said.

But all economists agreed on one thing, that is, at the summit developed countries could show respect to their developing counterparts in the global trade without adopting protectionism.

They said rich nations often cite health and security factors as the main concerns to cut imports from developing nations.

"Don't get manipulated. They often use 'old songs' to trick us, " said Fuad.

He said rich countries chose an unfair way against developing countries to protect their markets and workers.

Aviliani from the INDEF said that many developed countries protect their markets, especially in this current global slowdown to reduce layoffs.

"But rich countries still have to abolish their protection practices to allow developing countries' goods entering their markets," Aviliani stressed.

The economists said that developed countries should realize that they are no longer the main engine to support the global economic growth. Sofyan from Apindo said that currently, China and Japan hold the main role to revive the global economy.

"The countries hold much forex reserves while the United States and Europe are facing a crisis," said Sofyan.

As of December 2008, China held forex reserves of almost $2 trillion while Japan held around $1 trillion.

The bigger role of China and Japan in the world's economy will be one of the factors to trigger the world's monetary system reform. Usually, countries that face monetary problems turn to the International Monetary Fund (IMF) for help. But Fuad said that they should not make the IMF as the single body to handle the world's monetary affairs if they want to reform the world's monetary system,

"We have the World Bank and Asian Development Bank among others. And we can materialize an Asia Monetary Fund to lessen the IMF's job and to create competition between those financial institutions, " he said.

Fuad also said sometimes IMF's policy does not suit well with the developing countries' conditions.

"Asia knows better to manage its own business rather than Washington," he said.