05/10/2009 (Xinhua Net), Padang - The Indonesian government has to speed up efforts to fix infrastructures at three provinces in Sumatra Island that was damaged by a 7.6 Richter scale-earthquake on Wednesday to revive local economy that has national impact, economists told Xinhua on Monday.

They said that there are some measures that could be adopted to accelerate the recovery.

"The government should not merely rely on the state budget to fix infrastructures because it takes too long time," said Aviliani, an economist from the Institute for Development of Economics and Finance Indonesia (INDEF).

She said that the government has to provide guarantee for bank credit to fix damaged infrastructures because bank loans would not be disbursed without guarantee in time of crisis.

According to her, the recovery would need less than one year if banks involved in the process.

She also said that banks should forgive debt by the real sector so it could start to borrow again.

"The real sector's assets are ruined by the earthquake. It has to borrow from banks to revive. However, it can't start to borrow if it still has debt. So it is important for banks to forgive the debt so it could start to build business again," she said.

Besides, she said, the government should have a contingency fund to anticipate slowness in efforts for infrastructure restoration.

"The government should not ask for restoration fund after the quake strikes and damages infrastructure. They should anticipate it by providing the emergency fund," she said.

Previously, Finance Minister Sri Mulyani said that the earthquake will have major impact, not to local economy but also to the national one because West Sumatra and Jambi province are bases of crude palm oil production and export.

According to a senior official at the Indonesian CPO producer association (GAPKI), the recent major earthquake would disrupt the commodity export.

"If there is no immediate action to fix roads leading to the Teluk Bayur seaport in West Sumatra, palm oil export from many of the plantations in the province would surely be disrupted," the association's secretary Joko Supriyono said.

The two provinces contribute a significant CPO export volume to Indonesia as they have vast oil palm plantations with the only export exit at the Teluk Bayur seaport.

West Sumatra is home to 320,281 hectares of palm plantations with a CPO production of 978,845 tons per year while Jambi has 508,027 hectares of palm plantations with a production of 1,212 million tons per year.

West Sumatra's export value in 2008 reached 2.01 billion U.S. dollars, with more than 40 percent contributed by CPO while Jambi province's CPO export was worth 37.72 million dollars in the same period.

Meanwhile, a report said that the earthquake destroyed West Sumatra's tourism sector. According to the Indonesian Hotel and Restaurant Association, 11 hotels in the provincial capital city of Padang and surrounding areas were severely or totally damaged. The association could not provide the exact loss figures due to the earthquake.

Currently, the sector contributes 18-20 percent of the province GDP.

However, Pande Raja Silalahi, an economist at the Center for Strategic and International Studies (CSIS), said that the earthquake's impact to the national economy is not as big as people imagine.

"It's true that the economy activity is disrupted but the impact would not be too big for the national scale," he said, adding that the damaged assets by the earthquake are quite big for local economy.

He said that the biggest damage was related to the loss of many lives because they are potential human resources to build local economy.

Data showed that the affected provinces, namely West Sumatra, Bengkulu and Jambi contribute less than three percent of the Indonesia's gross domestic product (GDP).

However, Pande said, the main question is the sufficiency of the state budget to cover the loss.

"I think the government's budget won't be able to cover the infrastructure loss," he said.

The government has 100 billion rupiah (about 10 million U.S. dollars) to spend for relief effort and has set aside an additional 150 billion rupiah (about 15 million dollars) as backup funds.

Minister Sri Mulyani said that the government is serious in dealing with the infrastructure problem.