Focus on business<\/p>\n
The government's decision to shift the focus of its attention
\nthis year from macroeconomic management to microeconomic
\ndevelopment and the improvement of basic infrastructure is timely
\nand quite appropriate.<\/p>\n
Despite its lack of credibility and its poorer-than-expected
\nrecord of performance, the government did deserve some credit for
\nits achievement in strengthening macroeconomic stability.<\/p>\n
The inflation rate last year was checked at around 10 percent
\nin spite of the rise in utility prices. The rupiah exchange rate
\nwas able to weather the devastating impact of the terrorist bomb
\nattack in Bali and was controlled at a comfort zone of Rp 8,600
\nto Rp 9,2000 to the American dollar. The effort to maintain
\nfiscal sustainability was fairly successful with the state budget
\ndeficit being contained at 1.6 percent of gross domestic product.<\/p>\n
All these positive developments enabled the central bank to
\ngradually lower its benchmark, short-term interest rate from as
\nhigh as 17 percent last January to 12.90 percent at present.<\/p>\n
But the macroeconomic stability seems unable to stimulate a
\nhigh pace of activity in the various sectors of the economy. The
\npersistently slackening rate of investment, increasingly eroded
\nbusiness competitiveness, as reflected in the decline of exports,
\nand the threats by a number of foreign companies to move their
\nbusinesses from Indonesia to other countries clearly indicate
\nthat major hurdles still hinder the development in the individual
\nparts of the economy.<\/p>\n
The government also has been fully aware of the major problems
\nbesetting the business sector, as they have often been aired by
\nindustrial associations and foreign chambers of commerce.<\/p>\n
Most outstanding among the issues, as top economics minister
\nDorodjatun Kuntjoro-Jakti pointed out to the press after a
\nplenary Cabinet session on Monday, were related to incompetent
\nand corrupt tax and customs services, too rigid labor rules,
\ngovernment red tape and corruption, uncertainty about law
\nenforcement, complications caused by the start-up process of
\nlocal autonomy and crumbling infrastructure in many areas due to
\nlack of proper maintenance.<\/p>\n
Dorodjatun did not elaborate as to how the government would
\nimplement its new priority programs.<\/p>\n
But given the series of spats over policy issues between
\nCabinet ministers, such as those between Trade and Industry
\nMinister Rini Soewandi, and Finance Minister Boediono and
\nAgriculture Minister Bungaran Saragih, one cannot help but
\nconclude that this lack of coordination should be one of the
\nmajor problems that Dorodjatun should tackle early on.<\/p>\n
This requires Dorodjatun to properly exercise his authority to
\nensure that any policy measures pursued by economics ministers be
\ndirected to towards a stronger recovery of the economy. This is
\nmuch easier said than done. That task will require a delicate
\nbalancing act because a policy measure in one sector could
\ninitially harm another sector.<\/p>\n
As the chief economics minister in charge of coordinating
\npolicies in all economic sectors, Dorodjatun should be able to
\nact decisively and firmly in overriding any inordinately
\ncompartmentalized attitude of any member of his economic team
\nwithin the Cabinet.<\/p>\n
As the problems encountered by businesses in a particular
\nsector usually fall under the jurisdiction of several different
\nministers, Dorodjatun needs an effective forum wherein different
\nministers, senior officials of various agencies, leaders of
\nbusiness associations and top bankers work together to resolve
\nany issues brought up by businesspeople.<\/p>\n
Given the severity and multitude of the problems faced by the
\nbusiness community and the mounting urgency by which these
\nproblems must be resolved, a monthly Cabinet meeting on economic
\nmatters as opposed to the one that the government has held so far
\nis not effective for tackling the problems faced by the economic
\nplayers.<\/p>\n
Besides the session has run mostly as a perfunctory meeting
\nwhere bureaucratic rigidities and rules are often more important
\nthan bureaucratic action, the gathering does not include
\nrepresentatives of the main economic agents who are supposed to
\nimplement and be affected by any policy measures adopted by the
\ngovernment.<\/p>\n
In this context, one is reminded of the crisis center at the
\nMinistry of Trade and Industry. Minister Rini, frustrated and
\nimpatient with the virtual bureaucratic inertia in addressing the
\nproblems brought up by businesspeople, set up the center last
\nyear to be a forum between the government and the business
\ncommunity.<\/p>\n
However, the well-designed concept of the forum failed to work
\neffectively due to bureaucratic jealousy and lack of cooperation
\nfrom other ministries while many of the issues raised by
\nbusinesses are outside the trade and industry minister's
\njurisdiction.<\/p>\n
Dorodjatun would be well advised to take up such a crisis-
\ncenter concept to bring ministers and senior officials face to
\nface with business leaders, all hopefully motivated to resolve
\nproblems by executive fiat on the spot. After all we are still
\ndeep in an economic crisis that requires quick and firm
\ndecisions.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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