Still waiting for bold steps<\/p>\n
There was little to talk about when the widely trumpeted first
\n100-day economic agenda of President Susilo Bambang Yudhoyono's
\ngovernment ended. It is not even an exaggeration to say that the
\ngovernment miserably failed to capitalize on its strong political
\nmandate to launch bold, if unpopular, measures to accelerate the
\nprocess of regaining foreign investor confidence.<\/p>\n
One may argue that during the past month Susilo's government
\nhas been preoccupied coping with the impact of the devastating
\nnatural disasters in Aceh and North Sumatra on Dec. 26.
\nTherefore, the government has effectively spent only about two
\nmonths working on its economic agenda.<\/p>\n
But even within the first two months (until Dec. 26), the new
\ngovernment could have launched a real set of concrete measures in
\nthe top priority areas to build a higher credibility and stronger
\nmarket confidence.<\/p>\n
It is true that the key economic indicators for last year were
\nquite robust, reflecting significant progress from those in 2003.
\nThe economy grew by an estimated 5 percent, as against slightly
\nover 4 percent in 2003. Our sovereign rating was upgraded to B+,
\nnot yet an investment grade, but quite an improvement. The
\ngovernment's debt to gross domestic product ratio declined to
\nless than 50 percent and the incidence of poverty decreased
\nmarkedly. The rupiah strengthened and the Jakarta stock market
\nshare price index rose to historic highs of more than 1,000.
\nInvestment grew by 11 percent, compared to a mere 3 percent
\nexpansion in 2003.<\/p>\n
But Susilo's government cannot claim any credit for these
\nachievements. They were mainly the fruits of the previous
\ngovernment of Megawati Soekarnoputri, which succeeded in
\nmaintaining macroeconomic and political stability and, most
\nimportantly, in organizing three peaceful, free and fair
\nelections, including the first direct election of the president.<\/p>\n
Susilo rightly selected four disputes involving the government
\nor state companies and foreign investors: the Cemex-Semen Gresik,
\nKaraha Bodas- Pertamina, ExxonMobil-Pertamina and Newmont Mining
\nCompany as high profile cases that he promised would be resolved
\nin first 100 days. But none of them have been resolved.<\/p>\n
Early on during his first week in office, Susilo promised a
\nset of concrete measures and what he called "shock treatment" in
\ntop priority areas of his programs. He buoyed the market by
\ndemonstrating, through discussions and working visits to various
\nstate institutions, a clear understanding of the gravity of the
\ncountry's economic situation and the most pressing problems the
\ncountry encountered in the business sector.<\/p>\n
However, promises and symbolic moves, though needed, are not
\nenough to maintain the momentum of market confidence in his
\nadministration. Investors and the market require concrete
\nmeasures because only consistent and effective implementation
\nwill make government policies credible.<\/p>\n
Businesspeople don't expect instant results in all areas. What
\nthey really want to see is a steady progress along the right path
\nin a consistent reform process and not instead a one-off event.
\nEverything does not have to be fixed at once.<\/p>\n
More significant progress and many confidence-building steps
\ncould have been taken to deal with problems in top-priority
\nareas. There are certainly many measures outstanding that
\nrequire approval from the House of Representatives; a process
\nthat would require an arduous political consultation.<\/p>\n
Susilo could have targeted his shock treatment at the taxation
\nand customs directorate generals, two institutions that top most
\nbusinesspeople's lists of the most graft-ridden and inefficient
\nstate entities, to demonstrate that the government really means
\nbusiness when it says it wants to combat corruption and bolster
\ninvestment.<\/p>\n
Moving firmly and consistently to make tax audits more
\ntransparent and accountable, expediting the procedures for tax
\nrefunds and cutting the number of procedural steps to get
\nmerchandise customs-cleared at airports and seaports would go a
\nlong way in cutting the costs of doing business.<\/p>\n
What is most important is that the government should show
\nclear policy direction.<\/p>\n
Early, decisive action by the government is crucial to anchor
\nand sustain last year's investment recovery since investment is
\nvital to achieve one of the government's primary objectives -- to
\naccelerate quality growth.<\/p>\n
The first 100 days, however, have proved largely to be only a
\nsymbolic milestone and Susilo's administration cannot continue to
\nspend its political capital indefinitely. It should act
\ndecisively and quickly to spearhead much-needed reforms.<\/p>\n
Right now, the government needs to generate more political
\ncapital and stronger market confidence so it can build up popular
\nsupport for such bold, unpopular measures such as raising fuel
\nprices, something it must do soon to reform the economy and raise
\nmore money for poverty alleviation and welfare programs.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/still-waiting-for-bold-steps-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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