A legal, rational policy that break the people's trust

Some analysts say the decision to increase the price of various utilities is still the best under the circumstances. Amid the rallies on Monday The Jakarta Post's Kornelis Purba talked to noted economist Sjahrir. Excerpts of the interview follow:

Question: Was the decision to raise fuel prices, telephone rates and electricity charges really unavoidable?

Answer: I have to answer your question indirectly. If you look at the legal and procedural things about the decision it should not come as a surprise because it is a part of the budget which has been ratified by the government. Second, if you look at the technical economic aspects certainly (the decision) is a must.

But there is another problem now faced by the Megawati (Soekarnoputri) government -- the lack of credibility. There is no element of trust anymore from among the people. That was not the case last year, neither was that the case when she became president. And that caused a lot of trouble, because you cannot go and talk at a technical level anymore. We are talking about the total credibility of the government.

And until now the government does not have a moral superiority against anybody including against the New Order (although) there is always an excuse (from authorities) about the (legacy of the) past.

You said technically the new policy is a must. But why is President Megawati no longer credible?

Look at what was happening immediately before the price hikes. You have the husband of the President having a birthday party in Bali, inviting members of the legislature and the ministers. And people are confused. Is Taufik (Kiemas) the husband of the President or is he a co-president? And it has caused trouble because the same name has also been perceived by many as somebody who always interferes in so many cases concerning the government.

The fact that he made a very clear statement to replace State Secretary Bambang Kesowo is very odd as well as a very scary situation for a government that has to be perceived as stable. There are so many business activities related to IBRA (the Indonesian Bank Restructuring Agency), that are almost negatively linked to him, whether they are true or not.

And the President is just quiet about this, she never says what she thinks about what her husband did, unlike (former president) Soeharto who tried to defend his wife during the TMII (Indonesia in Miniature Park) case.

We can also talk of what happened with IBRA and with state- owned enterprises and privatization; what was done by State Minister of State Enterprises Laksamana Sukardi was far from sufficient to say that a transparent process had been done.

You also see how (State Minister for National Development Planning) Kwik Kian Gie became a cabinet within the Cabinet. And it has been perceived foolishly by the government as a state of democracy, in which a minister fights against another in public. It is nothing to do with democracy, it is simply a foolish government position.

What should the government do for "damage control"?

Well, the government must for a start say that we do have a crisis. And I do not think that up to the present that the government, whoever is in the government, has made a very clear signal to people saying that, "we admit there is a crisis, and we want you to make sacrifices and we will also make sacrifices together with you."

Nothing like that happened. Of course what happened in Bali with (the birthday party of) Taufik Kiemas showed that there was no sense of crisis at all. It is a total example of too much insensitivity in the highest echelon in the government.

What would be the political and economic impact?

We have a new dynamism coming into the political scene. This could be dangerous if it does not go through democratic or political channels. And I am talking about rumors of more and more people wanting a presidium instead of a president.

And people who do not want Megawati to stay will do whatever they can think of to depose her, while Megawati still thinks that even if there are people like that she does not need anybody to back her up.

Wouldn't a change in the government be too costly at this time?

I am not saying that I want to replace the government. I am saying that this is the situation, that has a lot to do with the fact that there is no sensitivity whatever among the people in the government.

What is the worst scenario as a result of the new policy?

I don't want to imagine it, it's so scary. But it is a pity that we have this kind of challenge, and so far we only show that we are very "suicidal" through (the policies of) the leaders.

The government insists the House of Representatives fully approves the policy.

The legal things and economic rationales are all there, but again it does not show that there is an element of trust between the government and the people. And you cannot blame people for that. Let's look for more rational things at the micro economic level, like the people who work in the textile industry.

Now more and more smuggling of textiles is happening. They can't think about exporting, even in the domestic market they have problems in selling their textiles. And now they also have to face the fact that while the government is not able to stop the smuggling, it instead increases the tariffs of electricity. For sure that will be a double jeopardy for them.

Who is the most responsible for this problem, the Cabinet or the President?

The one who is the most responsible is only one person, the President, because we have a presidential system. But the hypocrisy of the political parties must be corrected. If (Speaker of the People's Consultative Assembly and chairman of the National Mandate Party, PAN) Amien Rais wants PAN to be against the price hike, then he has to do what he did during (former president) Abdurrahman Wahid's era -- he has to ask PAN leaders in the Cabinet to resign. And PAN secretary general Hatta Radjasa is in the Cabinet. But if you want a decline in prices while you let members of the Cabinet from your own party continue to sit on the Cabinet, it is hypocrisy.

Is there any source of optimism?

There has always been a problem because of structure, which is of course totally consumer oriented. And if you have in five years of no investors coming, definitely the whole consumer-led growth will stop ... I don't have many reasons to say there are positive things. When you find the stock exchange is doing better, suddenly you find a decline in the stock exchange index. And so I cannot try to be optimistic, knowing what has been so far done by the government.

Does the so-called macroeconomics give you a powerful feeling that we are on the road to recovery? Look at the facts. Corruption does not stop. "Termites" destroyed all the buildings (of the economy) and we continue to have these corrupt termites.