Good governance or perish<\/p>\n
Djisman S. Simanjuntak
\nExecutive Director
\nPrasetiya Mulya
\nBusiness School
\nJakarta<\/p>\n
Most Indonesians are undoubtedly grateful for the
\nconsolidation of macroeconomic stability they experienced in
\n2003.<\/p>\n
At a time when the growth rate accelerated slightly, inflation
\nwas tamed at an annualized rate of less than 6 percent. The
\nrupiah gained strongly against the U.S. dollar, although it lost
\nheftily against the Australian dollar and Euro.<\/p>\n
In spite of a diminishing current account, surplus foreign
\nexchange reserves continued to increase thanks to the resumption
\nof capital inflow, which in turn pushed stock prices
\nsubstantially up.<\/p>\n
Notwithstanding the planned exit from IMF's Extended Fund
\nFacility (EFF), confidence in macroeconomic policy strengthened,
\npartly because of the credibility of the policy package that the
\ngovernment adopted to replace the IMF-backed Letter of Intent
\n(LOI).<\/p>\n
The fact that global disinflation and the depreciating U.S.
\ndollar served as a tailwind to Indonesia's stabilization program
\nprovides no reason to trivialize the accomplishment. However,
\nthere is much more to economic success than the combination of
\nmoderate growth, low inflation, exchange rate gain and a modest
\nincrease in foreign exchange reserve. Besides the early part of
\nthe 21st century is unique in recent history, in that it is
\nblessed with macroeconomic stability of a virtually global
\ncoverage.<\/p>\n
Indonesians who are trapped in poverty or are forced to
\nsurvive without a permanent job, or who are even jobless, may
\nfind the song of improved performance and the relative
\nindifference of politicians toward unemployment increasingly
\nstrange and saddening.<\/p>\n
Witnessing Indonesia's share in global output, trade in goods
\nand services and stock of foreign investment suffering from
\nerosion is worrying to those who derive national pride from
\nglobal competitiveness in interactions, that constitute the core
\nof human civilization. Only isolationists watch with
\nschadenfreude Japanese, European and American investors and
\ntraders flocking to China, Vietnam, India and East Europe
\nreducing their Indonesian presence at the same time.<\/p>\n
Infrastructure bottlenecks aggravate the problems of
\ncompetitiveness in industries, where tough global competition
\nprevails. Even the macroeconomic stability has not been as solid
\nas flow figures suggest.<\/p>\n
Against the backdrop of the huge debt of the government, the
\ndominant role of government bonds and Bank Indonesia's promissory
\nnotes in the earning assets of commercial banks, and dependence
\nof banks on blanket guarantees in dealing with risks, the result
\nof the consolidation loses much of its lustre.<\/p>\n
The slight acceleration of 2003 is expected to continue in
\n2004. While the domestic environment is going to get more heated,
\nin the wake of campaign rhetoric and show of force, no amok is
\nexpected to erupt.<\/p>\n
The risk associated with terrorism seems to have abated
\nfollowing the capture of some of its leading operators.<\/p>\n
The consumption-driven growth will most likely continue. Even
\ninvestment and export are likely to rise in spite of deeply
\npetrified obstacles: Lack of legal certainty, rampant corruption,
\nweakened commitment among politicians and bureaucrats to service
\nexcellence, high cost of doing business, myopic unions, rent
\nseeking among investors and traders, and the perennial shortage
\nof entrepreneurs.<\/p>\n
However, singing the same song of modest performance
\nimprovement will eventually cease to please the ears -- even
\namong the privileged wealthy minority who witness Indonesia
\ndrifting farther away, behind the economies it aspires to catch
\nup with.<\/p>\n
The post-EFF policy package is largely silent on structural
\nissues. Conventional approaches are doomed to fail in attacking
\n\"hypocritical legalism\" and shameful corruption. It would be the
\ngreatest irony of history, if the enemies of reform managed to
\nhide safely in the jungle of an unattended legal system.<\/p>\n
The trillions of rupiah that are bound to be sunk in the
\nelections 2004 would be a sheer waste, if they are contested
\namong reform-phobic politicians. While craving votes, political
\nparties should inform people unambiguously of the order of
\npriorities of their political agenda, and how they intend to
\naddress the core issues.<\/p>\n
An economic performance similar to the one Indonesia was
\nenjoying in 2003, and probably repeats in 2004, is insufficient
\nto create the number and diversity of jobs that Indonesians are
\nbadly in need of. Major increase in investment and trade is
\nindispensable for a performance that would help reignite the
\nrealistic hope for a rewarding toilsome wait.<\/p>\n
A wide variety of ingredients is needed to fuel such a surge
\nin investment and trade. They include a new economic
\narchitecture, which is able to unleash the entrepreneurial
\npotential of Indonesians in business, politics and civil
\nsocieties.<\/p>\n
Needless to say, drawing such architecture is a political
\nprocess with consensus as its crown. It is painstaking, but
\neasily compared to another indispensable ingredient: concrete
\nprogress in law enforcement and in good governance.<\/p>\n
Even a modest reform program looks utopian in the absence of a
\nconsistently enforced law and that of a clean government. A
\nnation can compensate inadequacy of competence with hard work,
\nbut for a state where corruption rages unchecked, extinction is a
\nsure destiny.
\n Therefore, crafting concrete progress in good governance is as
\nimportant to Indonesia's survival as the consolidation of
\nmacroeconomic stability. Should elections 2004 fail to give birth
\nto a coalition that ranks such progress highest as its short-term
\nprogram, the current acceleration of growth may soon etiolate.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/good-governance-or-perish-1447893297",
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