ECONOMIC MOVES IN INDONESIA

Press, Volume XCVIII, Issue 28984, 27 August 1959, Page 13

ECONOMIC MOVES IN INDONESIA

Trade Paralysed By Sweeping Changes

(N.Z Press Associatwn—Copynght)

(Rec. 11 p.m.) DJAKARTA, August 26. Financial stagnation spread through the Republic of Indonesia today while the nation’s leaders and businessmen began to implement sweeping monetary reforms. Trade life came to a halt on Monday when President Soekarno’s Cabinet published a series of decrees aimed at blocking a threatened economic crisis.

Scores of foreign and Indonesian banks stayed closed in Djakarta yesterday and will also shut under armed police guard today. Foreign exchange banks have been ordered to cease foreign exchange transactions until August 30, according to reports in Djakarta. Troops with rifles yesterday held back thousands storming banks in scenes near chaos in the heart of Djakarta’s trade centre. Export produce markets and home retail trade are virtually paralysed by the sweeping decrees which slashed 1000 and 500 rupiah notes to 10 per cent, of their face value, froze 90 per cent, of savings deposits over 25,000 rupiahs, as loans to the Government, abolished the export certificate system, replaced it by a system of taxes and duties, and established a new foreign currency equivalent of 45 rupiahs to one American' dollar. Dr. Djuanda, the Finance Minister, yesterday met directors of the capital’s banks for crucial discussions. He also installed a special Cabinet-level committee to take further steps on the Government devaluation decree.

Confusion continued to sweep Indonesian business circles as the Government kept silent on .details of the discussions already announced.

Most traders said they were awaiting Dr. Soekarno’s speech tonight, when he is expected to outline the Republic's future financial moves under the programme of guided economy. Cabinet Ministers last night declined to answer a reporter’s telephoned question on the

Presidential decrees. An evening newspaper last night splashed stories of a police investigation into charges that officers of the Foreign Exchange Bureau for Trade in Djakarta tried to change money to beat the devaluation by taking cash from the offices of the Treasury on Monday night. Although the impoverished man in the street applauded the President’s actions, several newspapers, including the Communist “Harian Rakjat,” made it clear that they felt many more working people had been affected by the devaluation than was conceded by the Government, the “New York Times” said today in a Djakarta dispatch. The “Times of Indonesia" said: “It would be correct to say that almost 80 per cent, of Indonesia's population is going to be immediately and personally affected.” However, the “Times of Indonesia” and other newspapers said, something drastic had to be done to strengthen the financial situation, the “New York Times” reported. The “Indonesian Observer" commented: “But we wonder if the sacrifice on the part of the innocent people is worth the measure. The decrees alone cannot save the country from its financial mess,” the newspaper said.

Security.— While taking an early walk in the Vatican garden, the Pope was approached by two workers who obviously wanted to pay the usual homage. They were warned away by the Papal police. “Why did you do that?” the Pope asked the police. "For security reasons,” was the reply. "Security?” said the Pope. “But I wasn't going to hurt them.”—London. August 26.

Death Sentence For Russians.— Six workers were sentenced to be shot, and three others to long prison terms for having murdered a man and raped his young wife in Leningrad, according to the Soviet newspaper “Leningradskaya Pravda.” Two of the three men imprisoned were given 15 year sentences and the other a 10year sentence.—Moscow. August 25.