Govt criticized for widening social gaps<\/p>\n
JAKARTA (JP): Market distortions, \"counter-productive\"
\nincentive systems and \"wrong\" strategies towards economic
\nglobalization are responsible for the widening of social and
\neconomic gaps in the country, a research group said yesterday.<\/p>\n
The Institute for Development of Economics and Finance
\nrevealed in its economic and political review that the current
\npolitical and economic systems are still not supportive of
\nefforts to narrow the divisions.<\/p>\n
When presenting the review, Didin S. Damanhuri, a researcher
\nat the institute, blamed the government for continuously
\ntolerating market distortions including a monopoly, an oligopoly
\nand cartel-like practices.<\/p>\n
\"All of those practices have resulted in a high cost economy
\nand inefficiency both at macroeconomic and microeconomic levels.
\nIn such a condition, consumers are forced to sacrifice by
\nsubsidizing the producers,\" Didin said.<\/p>\n
He criticized the government's tax incentive of cutting the
\nmaximum rate of income tax from 35 percent to 25 percent for the
\nhighest income group, as misleading.<\/p>\n
\"The better incentives for the private sector will actually be
\nthe simplification of procedures to get business licenses, the
\ncutting of various legal and illegal levies and the increased
\nsecurity of doing businesses here,\" Didin said.<\/p>\n
He called the government's strategy in facing economic
\nglobalization by empowering the already strong business groups as
\n\"wrong.\"<\/p>\n
Consequently, in its bank credit policy, the government gives
\nhigh priority to conglomerates, Didin said. In the second half of
\nthe 1980s, for instance, the government allocated Rp 50 trillion
\n(US$22 billion at current rate) for 22 conglomerates.<\/p>\n
\"When the problem of bad debts began to rise, most of them
\nwere credits extended to large borrowers. Remember the Eddy
\nTansil-Bapindo case,\" Didin said.<\/p>\n
Eddy Tansil, the boss of the Golden Key Group, was imprisoned
\nafter being convicted of corruptions in relation to a loan
\nscandal at Bank Pembangunan Indonesia (Bapindo), involving more
\nthan US$430 million in unpaid debts by the group in mid-1993.<\/p>\n
In facing the globalization, Didin suggested that the
\ngovernment assign big groups to focus on export markets and
\nconduct international business intelligence. Meanwhile, small and
\nmedium enterprises should be given more freedom to work on the
\ndomestic market.<\/p>\n
Didin warned that the economic divisions will continue to
\nwiden if the government is not serious in addressing the problem
\nthrough both economic and political measures.<\/p>\n
Based on his calculation, by using 1993 data from the Central
\nBureau of Statistics, Didin revealed that some 27 million people,
\nor 14.3 percent of Indonesia's population, live with Rp 1,346 (58
\nU.S. cents) per day, some 140 million people with Rp 2,692 per
\nday, 20 million people with Rp 10,654 a day and three million
\npeople with Rp 142,308 a day.<\/p>\n
\"If the government really wants to narrow the gaps, it should
\nfirst of all open the access of opportunities for all. That is
\nthe necessary condition,\" Faisal H. Basri, another researcher at
\nthe institute, said.<\/p>\n
He explained that when everybody has the same access of
\nopportunities, businesses will be growing and the competition
\nwill be the rule of the game. (rid)<\/p>",
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