Is Rini turning protectionist?<\/p>\n
The business community and many analysts hailed Rini
\nSoewandi's appointment as minister of industry and trade in
\nPresident Megawati Soekarnoputri's Cabinet in mid-2001. Her debut
\ngreatly impressed businesses, which praised her as a no-nonsense
\ndoer.<\/p>\n
As former chief executive officer of Astra International, the
\ncountry's largest automobile company, and a senior executive at
\nCitibank, Jakarta, she is indeed very familiar with the pulse and
\nheartbeat of the business world. No wonder then, she quickly
\nsucceeded in developing a very good rapport with the President
\nand became one of the Cabinet members most trusted by Megawati,
\neven though gender might also have played a part in this
\nchemistry.<\/p>\n
Rini's portfolio, which covers most economic activities -- in
\nreality, trade and industry are what the entire economy is
\nfundamentally about -- also makes her policy actions one of the
\nmost widely-covered subjects for the mass media and, in that
\nprocess, she has become one of the ministers constantly under the
\nmost intense public scrutiny.<\/p>\n
She soon found, however, that her leeway for decision-making
\nand fast action was not as ample as that she enjoyed as a
\ncorporate CEO, and she was often bogged down or frustrated by
\nbureaucratic inertia and politicking within the government.<\/p>\n
She also became frustrated by the incompetence and corrupt
\nmentality within the customs service, because rampant smuggling
\nsabotaged many of her policy initiatives to smoothen imports and
\nexports. Her proximity to the President has not always helped her
\nget things done the way she would ideally like to.<\/p>\n
Witness, for example, how she got herself embroiled in open
\nspats with the finance minister over import tariff policies, and
\nwith the agriculture minister over protectionist measures for
\nsome farm commodities, notably rice, sugar, soybean, corn and
\nchicken drumsticks.<\/p>\n
Understandably, she should strike a good balancing act between
\nfacilitating trade, including imports and exports, and
\nstimulating the growth of domestic manufacturing. She often
\ndeclares that not only free, but also fair trade and market
\ncompetition are her main objectives.<\/p>\n
Rini became so desperate after her futile attempt to tread the
\nslippery path of nurturing interministerial coordination in
\npolicy-making that she tried to take a shortcut by setting up a
\ncrisis center at her ministry. This operations center was
\noriginally designed to become a nerve center for senior officials
\nof all economics ministries and business leaders to quickly
\ndecide on and execute any policy measures needed to get the
\neconomy moving faster. The initiative, however, faltered after a
\nfew weeks due to lack of support from Coordinating Minister for
\nthe Economy Dorodjatun Kuntjoro-Jakti.<\/p>\n
Lately, however, Rini has increasingly been criticized by
\nanalysts for what they see as her strong tendency to take
\nprotectionist policies by raising nontariff barriers to imports
\nof sugar, rice, used clothes, certain categories of textiles and
\nsteel products, and several other commodities. These measures are
\nto be assessed by the World Trade Organization in Geneva on
\nFriday(today).<\/p>\n
Some analysts alleged that Rini has, of late, become weaker in
\nthe face of strong business lobbyists, thereby often resorting to
\nprotectionist measures, to the great benefit of some vested
\ninterest groups, but at the expense of the long-term good of the
\nwhole economy. She has also been suspected of flirting with
\nseveral vested-interest groups close to the President, especially
\nnow that fund-raising campaigns for the 2004 general election
\nhave started.<\/p>\n
Her involvement in countertrade deals, as a means of
\nfinancing the controversial government purchase of Sukhoi jet
\nfighters and helicopters from Russia, was the last straw.<\/p>\n
Rini's overambitious plan to bolster exports to new markets
\nthrough countertrade, which she has aggressively promoted since
\nlast year, seems to have made her overlook whether the political
\nand legal procedure for the jet fighter procurement had been
\ncorrect or not.<\/p>\n
Even though countertrade deals with Russia are being arranged
\nby the State Logistics Agency and not directly by her ministry,
\nmany businesses that produce commodities included in the deal
\nhave complained of being pressured by Rini's senior officials to
\ntake part in the countertrade program.<\/p>\n
Rini is well advised to magnanimously take the criticism as a
\nwell-intended early warning, to prevent her from falling further
\nto the temptation to take narrow-minded policy measures that
\ncould be detrimental to the long-term good of the economy.<\/p>\n
A government facing an election often tends to see things
\nmostly within a short time horizon by introducing populist
\nprograms that could threaten the long-term stability of the
\neconomy.<\/p>\n
Rini's position as an especially trusted aide of the
\nPresident, who is facing an election next year, could impair her
\njudgment to distinguish measures meant simply to distribute
\npolitical goodies to woo voters, from tough, yet vital policies
\nbadly needed to strengthen the foundations for sustainable
\neconomic growth.<\/p>",
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