Sydney, Mar 12: Indonesia's foot-dragging on reforms contrasts with the speed in which new leaders in Thailand and South Korea have embraced change and convinced investors their countries are on the road to recovery, analysts said on Thursday.President Suharto, 76, who has ruled the Indonesian archipelago unchallenged for 32 years, was regarded by international investors as a guarantor of political stability during Asia's boom years. But with many Asian economies now in crisis, investors fear political rigidity will mean reluctance to adopt the economic reforms being prescribed by the International MonetaryFund.
"What happened in Thailand and Korea was that they took advantage of international support and acted on it promptly," said former Australian diplomat Alison Broinwoski. "In Indonesia, they went into denial and they are still in denial," said Broinwoski, now an Asian analyst at the Australian National University. Thailand and South Korea have both elected new governments which have introduced wide-ranging financial reforms in return for bail-out packages orchestrated by the IMF. The IMF is reviewing Indonesia's progress on reforms that were agreed by Suharto in exchange for a $40-billion rescue package.
The IMF has expressed concern that Jakarta is dragging its feet and has delayed a second tranche of the package.
The Thai baht and South Korean won have recovered from record lows, leaving the baht 30 per cent and the won 46 per cent down on their values before the crisis began last July.
But the Indonesian rupiah remains shaky at around 10,000 to the dollar after plunging about 75 per cent since last July. "The problem with Indonesia is fundamentally we are not seeing the government make moves which the private sector regard as crucial for business confidence," said Bruce Gale from the Singapore-based Political and Economic Risk Consultancy.
"The fundamental situation has not changed, particularly as we have a president reluctant to introduce these reforms." Unlike Thailand and South Korea, Indonesia has no process for handling democratic political change, analysts said.
"(Suharto) should be stepping down now and leaving an anointed successor with a game plan to get Indonesia out of this crisis," said Carl Thayer of the Australian Defence Force Academy.
"He now risks ruining the reputation. of stability, growth and development in Indonesia."
Suharto was re-elected to a seventh five-year term in office on Tuesday as students held protest rallies against his rule. Thailand struck a deal with the IMF in September for a $17.2-billion bail-out. It has let 40 finance and securities companies close down and introduced a new constitution aimed at stamping out vote-buying and kickbacks. But it was the election in November of opposition leader Chuan Leekpai, a man with a reputation for honesty, which has convinced investors Thailand is on the road to recovery.
A regional economist at a European bank in Singapore said: "Chuan has made a huge difference to Thailand.
He was known as an honest man and he's certainly proved this during his time in power. He has brought a dignity to Thai politics that we haven't seen before."
In a potent symbol of Thailand's renewed status among investors, international financier George Soros stood side by side with Chuan during a speech in New York on Wednesday night.
Analysts say Chuan has been able to implement reforms against vested interests because of Thailand's robust democracy and free press, which has campaigned to end corruption.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
