2002: Is Indonesia entering a vicious or virtuous circle?<\/p>\n
Sabam Siagian
\nEditor-at-large
\nThe Jakarta Post
\nJakarta<\/p>\n
From the outset of planning the two-day discussion, we, at the
\nnewspaper, realized the risks involved in bringing together a
\ngroup of social scientists, cultural observers and NGO activists,
\nparticularly because economists tended to dominate.<\/p>\n
Preventing the encounter from becoming an in-house discussion
\namong economists of different schools was quite a challenge for
\nthe moderators. At the same time, it was not easy to notify the
\nparticipants that the aim of the discussion was to look at the
\nIndonesian situation in its entirety and identify whatever
\nopportunities might present themselves in 2002.<\/p>\n
It was fortunate that the economists participating in the
\ndiscussion kept hammering home the importance of a people-
\noriented economy. In this way they conveyed the fact that, while
\nIndonesia was facing problems both in its banking industry and a
\ncrushing debt burden, did not mean that the Indonesian economy
\nwas suffering from a severe crisis.<\/p>\n
One participant stressed that a great number of small and
\nmedium enterprises (SMEs) were still flourishing and that it was
\ntheir performance that had enabled Indonesia's economy to
\ncontinue running. He also noted that Indonesian economists relied
\ntoo much on the neo-classicist theories of Western economists.<\/p>\n
To say that he was almost clobbered by the other economists in
\nthe room is perhaps overly dramatic. Still, this people-oriented
\neconomist managed to excite his colleagues. Submitting data and
\nfigures, they argued that unless there was movement in asset
\nsales and privatization, a cleaning up of the banking industry
\nand a favorable rescheduling of the public debt burden by the
\nParis Club, the impact of the SMEs on the national economy would
\nremain limited, however great their activity. A fellow economist
\neven argued that his data showed that a process of impoverishment
\nwas taking place among the people.<\/p>\n
The disturbing thought that occurred throughout this two-day
\ndiscussion was whether the observations and the data presented by
\nthe economists were of relevance only for particular parts of
\nIndonesia or whether they were valid for the country as a whole.<\/p>\n
One beneficial outcome of this debate on the relevance of a
\npeople-oriented economy was that the non-political factors were
\nshown to be important enough for serious discussion. After all,
\nsuch issues as political reform, the urgency to curb corruption,
\nthe need for cultural renewal - in short, the challenge of
\nenhancing the quality of governance in this country -- directly
\naffect the levels of productivity and innovation and provides a
\nvaluable experience for the economists participating in the
\ndiscussion.<\/p>\n
Listening to the persuasive arguments and high-quality
\nobservations presented by a range of political and social
\nscientists, cultural analysts, political reformers and
\ntheologians, it was difficult to become seized by a bout of
\ndepression watching the shaping of a gloomy outlook affecting
\nIndonesia in the coming year. They talked about conflicts, not
\nonly between ethnic groups or even neighborhoods affected by
\neconomic deprivation, but on a higher level between the
\nlegislative body and the executive.<\/p>\n
The upshot, among other things, was the conclusion that the
\nprocess of asset sales and privatization, which would help
\nreplenish the state coffers and eventually benefit the public at
\nlarge, has got stuck. The need for accountability and
\ntransparency in government operations and political processes was
\nstressed as being part and parcel of the democratization process
\nin this country. Apparently, however, to achieve these goals,
\nembedded traditional values need to be readjusted -- meaning such
\nhabits as the unquestioning acceptance of authority.<\/p>\n
These traditional values were actually reinforced near the end
\nof the regime of former president Soeharto, who managed to create
\na neo-feudalistic system. It was also pointed out that one of the
\nimportant factors that has helped to fan long-festering
\nconflicts, be it in Aceh or in Maluku, was the fact that
\npreviously existing local institutions for peaceful conflict
\nresolution have been destroyed.<\/p>\n
One participant argued vigorously for total reform of the
\nConstitution, which he regarded as an absolute necessity for
\nbuilding a new Indonesia. Without such a systemic overhaul, he
\nbelieved it was nonsense to talk about reform in Indonesia. He
\nalso argued that the drafting of a new constitution should be
\nentrusted to a separate body elected on the basis of a more
\ndemocratic election law and should not be done by the People's
\nConsultative Assembly (MPR), which would merely patch up the
\nexisting 1945 Constitution with amendments.<\/p>\n
I could not help but recall the grave situation at the end of
\nthe 1950s, when an elected constituent assembly, which convened
\nin Bandung, failed to reach an agreement due to sharp differences
\nregarding the foundations of the state. The country was already
\nweakened by a serious regional revolt aided by foreign powers and
\ndeclining export prices of its main commodities. The situation
\nwas further aggravated by the West Irian problem, with
\nnegotiations headed toward a deadlock at the United Nations. It
\nwas therefore not surprising that President Sukarno, with the
\nsupport of the Army under General A.H. Nasution, unilaterally
\ndecreed a return to the 1945 Constitution. That spelled the end
\nof a serious attempt to draft a new constitution for Indonesia.<\/p>\n
Does this mean, however, that more than 40 years after the
\nevent, Indonesia, with a sluggish economy and raised poverty
\nline, is strong enough to cope with the intense experience of
\ndrafting a new constitution?<\/p>\n
Is it this sort of vicious circle that Indonesia will enter in
\nthe coming year? The country is beset by a host of problems. The
\nbanking industry is in disarray, the country is bent double under
\na tremendous debt burden that needs to be serviced; government
\noperations move slowly, in part because of the intrusiveness of
\nthe legislative body, in part because of the implementation of a
\nregional autonomy law that is subject to a variety of
\ninterpretations, but also because of the inherent indecisiveness
\nwithin the upper echelons of the government.<\/p>\n
Surprisingly, during the last hours of the two-day meeting,
\nwhen all the participants were asked to sum up their views
\nsuccinctly, a mood of very cautious optimism became evident. I do
\nnot think it was a case of a need to brighten up the atmosphere,
\ndriven by guilty feelings after painting such a gloomy picture.<\/p>\n
One young economist known for his sharp analyses ventured that
\nbarring some calamities the country's economic growth could reach
\na level of at least 3.4 percent this year and possibly even
\napproach the 4 percent mark - hardly adequate to absorb the
\nmillions of Indonesian job seekers, but at least high enough to
\nprovide a leeway for the country.<\/p>\n
Another participant noted that the sociocultural fabric of the
\nnation is sill basically intact and that the capacity for
\nreconciliation in areas affected by armed conflict is not totally
\ndestroyed, an inspiring state of affairs on condition that the
\ngovernment can provide a firmer and more visionary leadership.
\nThe hour was rather late when the problem of leadership was
\ntouched upon -- and that actually was at the core of the problem,
\nwhich might possibly warrant another meeting.<\/p>\n
President Megawati Soekarnoputri, who controls the largest
\nparty and who is likely to continue to have the support of the
\nmajority of parties in the national legislature until the 2004
\nelections, should be able to inspire the nation and instill in
\nher government the resolve to attain the objectives of economic
\nrehabilitation, political reform and the restoration of social
\norder based on a clear scale of priorities. She actually could
\ncharm members of the legislative body by conducting regular
\nconsultations in order to push through the necessary legislation.<\/p>\n
In short, the two-day discussion conveyed the message that
\nopportunities are still there for Indonesia to grasp as it
\nprepares to enter a virtuous circle in the coming year. This is
\nall provided there is a gradual straightening out of the banking
\nindustry, a speeding up of asset sales and privatization and a
\nbetter working relationship between the executive branch and the
\nlegislative body, the enhancement of nationwide public security,
\nand a continuous curbing of corruption, which would make
\ngovernment agencies more responsive to public needs.<\/p>",
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