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Thursday, January 15, 1998 Published at 16:58 GMT



Despatches
image: [ BBC Correspondent: James Morgan ]James Morgan
BBC Business

The programme of economic reform that President Suharto of Indonesia has agreed with the managing director of the IMF, Michel Camdessus, promises far-reaching economic reforms and vast changes in the way business is done in Indonesia, if fully implemented. BBC economics correspondent James Morgan looks at what the future might hold for the beleaguered country:

In spite of the obvious blemishes in the way much of business and industry has been run in Indonesia, the country achieved much under President Suharto. Many gains are now at risk.

One was the elimination of mass poverty, the kind of poverty where vast numbers have to subsist on less than a dollar a day each. In real terms income per head nearly quadrupled.

Average life expectancy rose to more than 63 years and more than 90% of the population of this vast archipelago have access to health services.

As one economist close to the government put it this week, macroeconomic managmenent, that is guiding the overall economy has been excellent in Indonesia, it's the details that have gone wrong.

Those details include giving monopoly powers to members of the President's family and creating a labyrinthine bureaucratic system that means new entrants just had to know the right people.

Much of the IMF-backed reform programme aims at changing all that; in fact the details here will prove far more important in the long term than all the usual words about monetary and fiscal policy.

As in Latin America a decade ago it is possible that an economic catastrophe will in the end deliver some notable political benefits.





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