Economist queries govt's role in the market<\/p>\n
MEDAN, North Sumatra (JP): The government's intervention in a
\nmanaged market economy may not guarantee greater welfare for the
\npeople if it is not carried out flexibly and transparently, an
\neconomist says.<\/p>\n
Anwar Nasution of the University of Indonesia's School of
\nEconomics said here yesterday that while there is no formula to
\ndetermine how much a government should intervene in a market,
\nsometimes no intervention is better.<\/p>\n
He cited Bank Indonesia's recent intervention into privately-
\nowned Bank Pacific, which he said showed a lack of transparency
\non the part of the central bank.<\/p>\n
"Of course, intervention by BI was needed, but the assistance
\nit gave to Bank Pacific was not transparent... And such support
\nhas been given many times," he said at the 13th congress of the
\nIndonesian Economists Association.<\/p>\n
Nasution said he was convinced that BI did not merely provide
\ntechnical assistance but financial support as well.<\/p>\n
Such cases, he said, show that part of BI's domestic credit
\nagenda is to help certain banks in trouble.<\/p>\n
"Lack of transparency in the banks' mechanisms and goals makes
\nBI a lender of last resort for the banks it favors," he said.<\/p>\n
Nasution said it will be difficult for BI to implement a tight
\nmoney policy and narrow the gap between interest rates in
\nIndonesia and those overseas if the banking industry's financial
\ncondition and banking practices are not improved.<\/p>\n
Miranda S. Goeltom, a deputy assistant to the coordinating
\nminister for economy and finance, acknowledged the significant
\nrole of the government in a managed market economy. She added,
\nhowever, that the private sector must help ensure that government
\nintervention is kept to a level that doesn't distort too much.<\/p>\n
Professionalism<\/p>\n
"This can be done by increasing the professional competence of
\neveryone who has an influence over price regulations or output.
\nBusinessmen must be professional entrepreneurs, executive
\nagencies must be professional bureaucrats and legislators must be
\nprofessional parliamentarians," she said.<\/p>\n
Professionalism, Goeltom said, is needed for businesses to
\noperate as efficiently as possible. It is also important for the
\ngovernment to have almost the same amount of information on cost
\nproduction as businesses and for the House of Representatives to
\nbe aware of the appropriate balance between the rent obtained by
\nbusinesses and the cost put out for it, she said.<\/p>\n
As a first step in this direction, Goeltom suggested that all
\nplayers increase their knowledge and ability to analyze the
\nmarket in order to level the playing field.<\/p>\n
At the same time, it is also necessary to improve legal and
\nregulatory procedures.<\/p>\n
"Inefficiency can only get worse if there is collusion between
\nthe government, businesses and the controlling body," Goeltom
\nsaid.<\/p>\n
"Least-distorted government intervention is most often needed
\nin situations where the market economy fails," she added. (pwn)<\/p>",
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