TEMPO Interactive, Jakarta: Billioner George Soros said that the strong corruption practices and the weak law enforcement in Indonesia have been the main cause of low economic growth.
“East and South Asia have grown rapidly, but Indonesia does not participate in it,” Soros told Tempo in a special interview yesterday (12/11) in Jakarta. Soros is visiting Jakarta to follow a series of public discussions on Indonesia’s Economic and Political Perspective 2007 that Tempo is holding.
Soros cited China and India as two countries that are really capable of making use of the momentum to accelerate economic growth. According to him, at the same time, the US economy suffers from recession. “They (China and India) are capable of growing 9-10 percent per year,” he said.
He said that economic recession in the US can be clearly pictured in the decrease of demands for housing. Demands on house ownership in the US, with a yearly average demand of US$900 billion, has dropped to US$500 billion in 2006 and will possibly decline in 2007.
From another side, the Fed's interest rate of 4.25 percent, which is estimated to rise once again, will depreciate the US dollar more. “So far, housing has boosted consumers' demands,” he said.
Soros explained that although US economy is yet to experience recession, the dollar has decreased during 2006. Yet, the delaying US economy creates a new economic balance at the other side of the world.
According to him, strong government policies are required to enable Indonesia to grasp the chance to form a new balance in the world economy. They include, for instance, a firm policy in eradicating corruption and strengthening protection over the right of ownership.
“When will Indonesia awaken? It depends on how fast it takes the government to set up the policy,” he said. He said that India is good at democratization and China is firm in enforcing law. “This must be followed,” he said.
Nevertheless, Soros stated that Indonesia has experienced great progress in democratization. “(It is proved that) the press has been very open,” said the Head of the Soros Management Fund.