A business solution

A business solution

The dialogs on Monday between the two presidential candidates
-- Susilo Bambang Yudhoyono and incumbent president, Megawati
Soekarnoputri -- and national and foreign business leaders are
greatly encouraging, as regards the future management of our
economic problems.

We were impressed by Susilo's eloquence in demonstrating his
comprehension of the multi-dimensional crisis that we have been
facing since early 1998, and the commonsensical manner in which
he presented his policy recommendations.

He showed full understanding of the vital importance of basic
infrastructure, legal certainty, the sanctity of contracts, the
crucial role of the dispute settlement mechanism, and the role of
tax as the main source of state revenue and as an instrument to
enhance economic justice.

Susilo seems fully aware of the severe limitations of the
government's budget, and consequently of the vital role of the
private sector as a primary source of investment, without which,
the economy would remain stagnant and no new jobs would be
created.

It is precisely because of the similarity of their economic
strategies and policies that investors and businesspeople are
reassured that, regardless of which candidate is elected, the
next government will continue to emphasize the strengthening of
macroeconomic stability as a basic foundation to spur sound
growth in microeconomic sectors.

In fact, given the severe limitations of the state budget, at
least until 2009, since almost one third of its revenue will have
to go on serving domestic and foreign debt and subsidies on fuel
and other poverty-alleviation programs, the next government has
no other alternative but to focus on reinvigorating domestic and
foreign investment.

It is investment that creates jobs and provides wages, which
in turn generates purchasing power, fuels consumer demand to keep
factories in production, and generates tax revenue to fund the
government, public services and utilities.

However, investors require the very things our presidential
candidates outlined at the business dialogs: Legal certainty,
adequate infrastructure and good governance, efficient customs
and tax services and conducive labor and business regulations.

The questions then are these: If there is nothing
fundamentally wrong with the economic plan of the present
government, why is our economy trapped in a low-growth cycle? Why
are 10 percent of the nation's 103-million-strong workforce
unemployed? What makes foreign investors shun our economy and
domestic investors still reluctant.

Here, we think, lies the real importance of the presidential
election next month, and what happens thereafter.

What is fatally missing from the present government is a real
sense of crisis, and a sense of urgency to make decisions on, and
resolutely execute, the right priority programs. Because, as
strong as the Megawati government claims macroeconomic stability
to be, the economy not only remains highly fragile but also
continues to bleed, suffering under mountains of foreign and
domestic debt.

What is urgently needed, therefore, is a strong leader with a
team of able and credible ministers. Ministers of impeccable
integrity, who would work in the spirit of a hospital's emergency
unit, whereby fast decisions and concrete programs of action are
more important than bureaucratic rigidities.

However, such an overall work spirit is possible only if the
new government is able, through good governance practices, to get
the public on side and secure the support of the House of
Representatives -- unlike the present administration, which has
suffered constant public suspicion regarding any major decision,
whether planned or implemented. Consider the trouble the current
administration has had trying to sell some of its assets -- even
already approved by the House -- without setting off an
employee's revolt, or prompting analysts to cry fault.

With some modifications and adjustments the spirit and format
of Monday's business dialogs with the Indonesian Chamber of
Commerce and Industry could be transformed by the new government
into an economic-crisis management center, where policy decisions
could be decided with speed and coordinated by fiat decisions at
the highest level.

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