RI needs to shift gear to high-growth path<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
Indonesia needs to aim for higher growth in the coming years
\nto regain its lost momentum in development and to keep the
\ncountry united, said economist Djisman Simanjuntak.<\/p>\n
Djisman said on Monday that most of the economic indicators --
\ninflation, interest rates and the rupiah -- showed that the
\ncountry was on the right track, but it must grow at 8 percent or
\nhigher, as China did for the past two decades.<\/p>\n
\"A growth rate of 3 to 4 percent a year for an extended period
\nis simply inadequate to keep the already strained republic
\nunited,\" Djisman said in his luncheon speech at the economic
\ndevelopment strategy seminar hosted by The Jakarta Post.<\/p>\n
\"If the vision is to return to a high-growth path as soon as
\npossible, and if its success requires an anchor of stability in
\nthe likely chaotic environment of the 2004 election year,
\nmaintaining the IMF program for another year or two should
\nseriously be considered,\" he said.<\/p>\n
If it is difficult to maintain the IMF's role in its current
\ncapacity, Djisman said the government could devise a new post-
\nprogram monitoring role for the IMF.<\/p>\n
Djisman acknowledged that a high economic growth was not a
\npanacea for all the problems that have afflicted Indonesia since
\nbefore the crisis.<\/p>\n
\"In its absence, however,\" he warned, \"the very existence of a
\npoor nation is put to a serious test.\"<\/p>\n
With the momentum of development lost, he said the glue that
\nheld together the \"imagined community\" of Indonesia had been
\nthinned.<\/p>\n
Djisman said the crisis had made Indonesia's economy much
\nweaker than it had been before 1997, which provided all the more
\nreason for a need to shift to a faster growth track.<\/p>\n
While the total gross domestic product (GDP) has yet to return
\nto the 1997 level, the population has risen by 15 million people,
\nor 15 percent, since then, giving rise to severe unemployment
\nissues.<\/p>\n
Indonesia is also slowly disappearing from the investment map,
\nas its investment market is steadily shrinking. In the 1997-2002
\nperiod, annual approvals of domestic investment fell 21 percent
\nand foreign direct investment fell 29 percent.<\/p>\n
\"Indonesia is shrinking into a 'trade dwarf', suffering from a
\nlevel of exports that has hardly changed in six years and a level
\nof imports that has shrank by almost a third,\" Djisman said.<\/p>\n
He said the recipe for shifting gears up to a faster track was
\nto change the current economic architecture of state capitalism
\nto an open economy; in other words, to open up to globalization.<\/p>\n
The next step was to change into a market economy by, among
\nother things, privatizing ineffective, corruption-ridden, state-
\nowned enterprises (SOEs).<\/p>\n
\"Stripping the state of a large chunk of its business
\nownership is perhaps a necessary condition for a successful fight
\nagainst corruption, the central government's possessiveness
\ntoward its lower tiers and other symptoms of bad governance,\" he
\nadded.<\/p>\n
Djisman added that Indonesia needed to focus on good
\nregulatory measures rather than ownership of businesses, on
\nsocial capital than economic types of capital, and on tax revenue
\ninstead of property and investment income.<\/p>\n
Lastly, the new economic architecture must include an
\nadequate, built-in social protection system that levies positive
\ntaxes on wealthy citizens and provides a free-tax facility for
\nthe poor.<\/p>\n
\"Social insurance is needed to enable underprivileged citizens
\nto cultivate a sense of ownership in the development process,\" he
\nsaid.<\/p>\n
Businesspeople, Djisman added, must be encouraged to invest in
\n\"non-zero\" interactions, such as support learning facilities and
\npre-competitive research.<\/p>\n
In order to make the changes work, Djisman stressed the need
\nto comply with the principles of good governance, because \"It
\nallows the existing system to work better and to deliver
\nprosperity at a higher pace and a better distribution.\"<\/p>\n
\"Under a much better system of law enforcement against corrupt
\nand collusive practices in politics and business, including
\nbanking and civil societies, Indonesia might have catapulted
\nitself ahead of the rest of developing Asia,\" he concluded.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-needs-to-shift-gear-to-high-growth-path-1447893297",
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"sponsor_url": "https:\/\/okusiassociates.com"
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