Globalization means challenges<\/p>\n
The following article is based on Minister of Education and
\nCulture Juwono Sudarsono's keynote address at the international
\nseminar Toward Structural Reforms for Democratization in
\nIndonesia on Aug. 12 in Jakarta. The seminar was organized by the
\nIndonesian Institute of Sciences and the Ford Foundation.<\/p>\n
JAKARTA: After 30 years of maintaining an average annual
\ngrowth rate of 6.5 percent, reducing absolute poverty from 56
\npercent to 12 percent of the population, maintaining
\nfundamentally sound macroeconomic policies (adequate reserves,
\nlow inflation, balanced budget, manageable current account
\ndeficits), transforming GDP per capita from US$70 to $1300 -- the
\nunpredictable forces of global financial and capital markets
\nserved to underscore Indonesia's imperative to establish strong
\nsocial, political and economic institutions.<\/p>\n
The need for such institutions has been made even more
\ncompelling in the light of Indonesia's efforts to recover from
\nthe ongoing economic and monetary crises. It has also underscored
\nthe importance of factoring the impact of globalization on
\ndemocratization in Indonesia.<\/p>\n
The monetary and economic crises came about as a result of
\nthree inopportune external circumstances which came to a head in
\nJuly\/August 1997:<\/p>\n
* The 50 percent strengthening of the United States dollar
\nagainst the Japanese yen since the Japanese bubble economy broke
\nin 1991. As a result, Japan began to regain its competitiveness
\nvis a vis other Asian economies. Malaysia's exports fell to 4
\npercent from 26 percent in 1995, Indonesia's plunged to 8.8
\npercent from 13 percent and Thailand to 0.1 percent from 25
\npercent. ASEAN exports became uncompetitive, both on an exchange
\nrate basis as well as on wage productivity differentials.<\/p>\n
* The devaluation of the Chinese currency by 35 percent in
\nSeptember 1994, resulting in its manufactured exports becoming
\nmuch more competitive in Japan, Europe and North America. This
\nadversely affected ASEAN -- especially Indonesian --
\nmanufacturers who had enjoyed advantages in securing markets
\nthroughout the 1980s and early 1990s.<\/p>\n
Largely because of the importance of the manufacturing sector
\nto the economy (constituting 40 percent of Indonesia's non-oil
\nexport earnings) and to political stability (absorbing around 35
\npercent of our labor force, small and medium enterprises), these
\ndifferentials will determine the course of democratization in the
\nindustrial and population centers of Sumatra and Java.<\/p>\n
* Massive corporate loans (totaling roughly $60 billion from
\nEurope and Japan, $16 billion from North America) to largely non-
\nperforming private banks and companies in Indonesia, without
\nadequate and effective control over amount, terms and target
\nallocation. These were clear cases of \"too easy, too much, too
\nsoon.\"<\/p>\n
Foreign private lenders as well as domestic private borrowers
\nwere both at fault to the extent that many of these loans were
\nsecured through Chinese-Indonesian related banks and non-banking
\ninstitutions, the repayment of corporate and banking debt will
\ninfluence the level of intra-elite consensus and \"horizontal
\naccountability\" between political-economic groupings.<\/p>\n
Four characteristics of the impact of globalization on the
\nprospects for democratization in Indonesia are:<\/p>\n
(1) Providing the right state-market mix.<\/p>\n
Foreign capital and their domestic corporate partners often
\neffectively decide the terms and conditions of local workers.
\nThey can also apply the threat of relocation of production to
\nother sites or countries to bargain down wages and benefits.<\/p>\n
The destruction of governmental and corporate wealth in
\nIndonesia led to the loss of roughly 23 million low-paying jobs
\nwithin the span of the past six months.<\/p>\n
The number of Indonesians living below the poverty line has
\nincreased from 23 million in mid-1997 to about 80 million at the
\nend of July 1998. The \"magic of the market\" may work for those
\nwho have ready access to capital, information and skills, but not
\nfor those who lack education, skills and well-placed connections.<\/p>\n
The paradox of democratic reform is that as state intervention
\nis reduced to allow for a higher degree of freedom and
\nefficiency, the bureaucracy's technical skills must be improved
\nin order to deliver the required public goods (enforceable legal
\ncodes, improvement of human capital through selective vocational
\nskills and retraining programs) and to provide an effective
\nsocial safety net.<\/p>\n
(The Indonesian government, assisted by the World Bank and the
\nAsian Development Bank is currently implementing a $400 million
\nthree-year emergency program in primary and secondary education).<\/p>\n
(2) Building consensus among business, labor and farmers.<\/p>\n
There must be greater acknowledgment and attention to the
\nrelationship between business and politics in Indonesia. Nowhere
\nis this more important in gauging the relative weight of power
\nbetween business and labor in cities and farmers in rural areas.<\/p>\n
Without adequate economic institutional capacity to adjust to
\naccelerated change in the globalized world, unskilled workers and
\npoor farmers suffer from the application of new techniques and
\ninnovative technology preferred by management.<\/p>\n
If both economic reform and political democratization are to
\nremain sustainable, there must be regular broad-based
\nconsultation and negotiation between business, labor and
\nagriculture.<\/p>\n
These benchmark agreements are particularly important in
\nIndonesia's crisis-ridden economy since workers and peasants are
\nwilling to accept painful adjustment provided the hardship is
\nshared across society.<\/p>\n
Labor leaders are particularly irate that in an economy still
\ncharacterized by over-concentration of wealth and rent-seeking
\n(often linked to foreign corporate interests) workers are
\nburdened with \"sacrifice without representation\" and \"suffering
\nwithout compensation\".<\/p>\n
Crafting coalitions between these conflicting interest groups
\nrequires dedicated work in organization building and leadership
\nskills.<\/p>\n
(3) Establishing an information infrastructure.<\/p>\n
The argument for openness of information and communication are
\nthat they provide the societal \"operating system\" through which a
\nmore democratic Indonesian \"software\" provides transparency and
\naccountability.<\/p>\n
These in turn help strengthen trust and cooperation through
\nopen dialog and informed debate. As new patterns of power and
\nprivilege are established through reform, the new political and
\neconomic alignments must be openly explained and debated in order
\nto gain legitimacy and moral support.<\/p>\n
Indonesian media, particularly in the private broadcasting
\nfield, must provide the infrastructure of open dialog by striking
\nthe right balance between information, entertainment and public
\neducation.<\/p>\n
They must avoid the tendency in many advanced industrial
\nnations to transfer the sovereignty of citizens to the
\nsovereignty of media moguls. The building of a civil society and
\nthe civil economy can only be built on the principles of a true
\ncivic media culture.<\/p>\n
(4) Rebuilding \"social capital\".<\/p>\n
From Aceh to Irian, from Sangir Talaud to East Timor, rural
\nand urban communities are bypassed or undermined by the effects
\nof globalization.<\/p>\n
Social units and networks that for decades provided a
\nresilient sense of community, social peace and informal civic
\neducation have suffered from increased fragmentation as
\nindividuals, groups and communities jostle for immediate economic
\nand material benefit, spurred by calls for \"entrepreneurship\" and
\n\"the competitive spirit\".<\/p>\n
Greed replaced solidarity, particularly in volatile urban
\nconcentrations. Inter-ethnic and inter-communal relations were
\nput under great strain as demagogues resort to populist rhetoric
\ntinged with scapegoatism against ethnic and religious minorities.
\nThe tragedy affecting Indonesian citizens of Chinese descent last
\nMay in Jakarta will take many years to overcome.<\/p>\n
That is why there are concerns that despite the opportunities
\noffered by globalization -- greater freedom and more prosperity
\nfor skilled professionals -- those very forces can also result in
\neconomic disadvantage, social despair and massive cultural shock
\nfor the majority of our poorer citizens. The economic downturn
\nover the past 12 months has underscored the seriousness of
\nunemployment among our youth, both in urban as well as in rural
\nareas.<\/p>\n
Leaders from all walks of life -- politics, economics and
\nbusiness, arts, culture and religion, the media, the
\nuniversities, science and technology, and the military -- who
\nequate stability with the status quo will doom themselves to
\nsterility.<\/p>\n
For effective change to take place, democratic ideals must be
\ntranslated through organized collective behavior and
\ninstitutional capacity-building. There must be measured steps
\ntoward enhancing stability in stages, rising to a higher plane
\nand reaching out to a broader base of economic, social and
\ncultural democratization.<\/p>\n
There are no easy solutions, for the impacts of globalization
\nare invariably sudden, massive and turbulent. In an increasingly
\ncompetitive world, Indonesians from all walks of life must rise
\nto the challenges of global competition while at the same time
\nremain committed to our humanitarian values.<\/p>\n
Only if Indonesia's leaders constantly develop and synthesize
\nthese faculties of disciplined work and stirrings of the heart
\ncan future generations in Indonesia remain equal to the rising
\nchallenges of globalization and democratization now hurtling
\nacross Asia and the Pacific as well as throughout the world.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/globalization-means-challenges-1447893297",
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