Crisis calls for govt neutrality<\/p>\n
By Hendrajit<\/p>\n
JAKARTA (JP): The recent liquidation of 16 troubled banks,
\ngiven the close link between political power and business
\npractices, was indeed the first test of the government's
\npolitical will to deal with the business community.<\/p>\n
It is necessary for the public to have a clear signal that
\nthose who have enjoyed privileged access to the nation's
\nresources are willing to share the pain with tens of millions of
\nordinary Indonesians. These are the ordinary Indonesians who have
\nbeen hit by rising prices, unemployment and spiraling interest
\nrates on car and home loans. This means that the government
\nshould be committed to scrapping politically connected
\nmonopolies, rationalizing the country's shaky banking system,
\nreducing the subsidies of some sensitive commodities and cutting
\nimport duties.<\/p>\n
Indonesia's record of leaks and misuse of public funds via the
\ngranting of licenses is well-known and has resulted in a high
\ncost economy and market monopolies or oligopolies. The
\naccumulation of capital in the hands of a small number of people
\nhas become an extraordinary phenomenon in Indonesia as a result
\nof protection mechanisms and irregularities in the use of public
\nfunds. Thus in the process of economic reform, the question of
\npublic accountability is of paramount importance in terms of
\npolicy legitimacy.<\/p>\n
More importantly, the government must be transparent in its
\nuse of the public's funds in order to earn trust. Therefore,
\ntransparency and accountability in the management of public funds
\nand the budget are badly needed. But they are not easy tasks. In
\nan effort to improve banking performance, for instance, the
\ngovernment needs to be more proactive to maintain tough measures
\nagainst banks which are not managed prudently.<\/p>\n
Consequently, the government should be responsive, independent
\nand neutral from conflicting interests among the business
\ncommunity. Accordingly, the issue is what mechanism includes
\npeople and enables them to participate in the decision making,
\nwhere the interests of the people as a whole are well
\nrepresented? There must also be a mechanism to prevent the abuse
\nof power by the authorities and business elite who are very close
\nto government officials. If such abuse occurs, the authorities
\nand those who are close to power cannot be free from legal
\naccount.<\/p>\n
The problem that arises is that Indonesia's political
\ninstitutions are powerless, with no established rule of the game
\nto play by. The government's style of personalized rule, as
\nopposed to using institutional mechanism to exercise power, has
\nresulted in a political system which still has a patrimonial
\ncharacter as it had in earlier periods as far back as the pre-
\ncolonial Javanese kingdoms. The state stands above any contending
\ngroups or vested interest. It must be recognized that there is no
\ninstitution whose function is to capture the government. The
\ninstitutions of power are there to ensure the smooth running of
\nthe political system by integrating people into it.<\/p>\n
In such a situation, economic and political reform cannot be
\nencouraged from below, but only from the center with the
\ndevelopment of a healthy and authoritative bureaucracy and the
\nimplementation of laws in the wide sense. In consequence, the
\ncommitment to economic and political reform must be started from
\nthe top level of bureaucracy, not the lower level. This is partly
\ntrue because of Indonesia's tradition of patronage, where people
\ntake examples from their leaders. If the leaders were corrupt,
\nits subordinates would be corrupt as well.<\/p>\n
On the other hand, Indonesia today is facing new realities.
\nPressure for change from society is increasing. Although rural
\nIndonesians are still bound in feudal-traditional ways of life,
\nthere is growing chorus of urbanites who desire to see a less
\nauthoritarian and paternalistic rule of law. According to
\npolitical observer Dr. Richard Robison from Australia, there are
\ninternal forces at work as a result of Indonesia's economic
\nsuccesses. Increasing industrialization and urbanization are
\nhaving an increased influence on the aspirations and political
\nconsciousness of Indonesians. This newly affluent middle class
\nwill look toward a more open and responsive political system in
\nthe future. They are mostly dissatisfied with the excesses of
\nlocal government officials, the lack of public accountability,
\nand the relative gap in income between themselves and the
\nwealthier group. For the dissatisfied group, political change
\noffers the possibility of improving themselves.<\/p>\n
Robison's way of analyzing is indeed insightful. By the way of
\nhis observation, it is likely that in the future, power holders
\noutside the state will become more significant. In other words,
\npower will be moving to powerful social groups such as
\nindependent professionals, conglomerate owners and young
\nreformist officers. In short, change is already occurring among
\nthe educated middle class. More people are willing to confront
\nold taboos and rail against corruption, inefficiency, pollution,
\nlow wages and even nepotistic monopolies in business practices.
\nHence, those who hold power now must be wise enough to read the
\ndevelopment with clear glasses. This means that speaking about
\ndevelopment is really speaking about the adaptation of a whole
\nsocial system to new problems and challenges.<\/p>\n
Economic development does not take place in a vacuum. It needs
\na government that is strong enough and has a willingness to avoid
\nprestigious projects. It also means the willingness, the courage
\nand the capability to bring about the necessary administrative
\nreform. Economic development requires the capacity, the will and
\nthe courage of the government to organize the whole nation for
\nthat purpose, not only economically, but also politically. The
\ncapacity of the government to maintain the momentum of economic
\ndevelopment will very much depend on its courage and ability to
\nabsorb the political changes that follow in the wake of economic
\ndevelopment. Each phase of economic development will create its
\nown constituency, and these new constituencies will have to be
\nincorporated into the body politic of the nation. Clearly, it
\nneeds a constant broadening of the power base on which the
\ngovernment rests and a constant shifting of the constellation of
\nforces.<\/p>\n
The writer is a researcher at the Institute for Strategic
\nStudies of Indonesia.<\/p>",
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