Aburizal's coordination

Aburizal's coordination

Chief economics minister Aburizal Bakrie correctly observed
last week that it was difficult to reduce the high costs of the
economy without better coordination among the various economics
ministries and government agencies.

By making these remarks after accompanying President Susilo
Bambang Yudhoyono to a meeting with Australian businesspeople in
Sydney, Aburizal was essentially acknowledging a failure to do
his job as the coordinating minister for the economy.

Coordinating all the economics ministers in a concerted effort
to address the high costs that have damaged the competitiveness
of our economy should have been at the top of Aburizal's agenda
right from the start. He should have developed the Coordinating
Team for Facilitating Exports and Imports, which he chairs, into
an effective business-solution forum where all problems related
to exports and imports could be resolved quickly.

As the country's economic ills have been correctly diagnosed
and appropriate policy prescriptions formulated, taking into
account the recommendations of the Indonesian Chamber of Commerce
and Industry (Kadin) in its Business Road Map, Aburizal should
have been able to draw up an appropriate set of priorities and
measures to remove one by one the high-cost factors in the
economy.

As Aburizal is a former chairman of Kadin and took an active
part in preparing the chamber's Business Road Map, he must be
familiar with the most pressing problems that have made
Indonesian exports much less competitive compared to exports from
countries such as Vietnam and China. Aburizal also does not have
to worry too much about interministerial jealousy because he has
powerful support -- Vice President Jusuf Kalla, also a former
Kadin leader, who was appointed by the President to run the day-
to-day management of the economy.

A former businessman, Aburizal must be aware of the gross
inefficiency at ports that has made the port-handling costs in
the country almost twice as high as those in other ASEAN
countries. These high costs are the result of arduous clearance
procedures, a corrupt customs service and unnecessary
intervention in port operations by other state agencies.

What Aburizal needs to do now is demonstrate effective
leadership to turn the Coordinating Team for Facilitating Exports
and Imports into an operations center where economics ministers,
top bureaucrats and leaders of business associations can work
together to formulate a plan to fix the country's economic
problems. Any barriers to international trade such as inefficient
ports, punitively high terminal handling charges, arduous customs
clearance should be addressed immediately by the coordinating
team.

Aburizal should see to it that the team makes bureaucratic
action more important than bureaucratic procedures and
rigidities, resolving problems by executive fiat on the spot, all
with the clear objective of removing economic barriers one by
one.

Facilitating exports and imports would resolve the bulk of our
economic ills because international trade accounts for more than
50 percent of the country's economic activities. Moreover,
exports and imports are closely related. The process for the
production of export goods usually begins with the import of
basic materials. The implementation of investment projects starts
with the import of capital goods. Further down the line, a smooth
flow of goods enhances economic interlinkages between provinces
and islands.

A combination of executive leadership from Kalla and
coordination provided by Aburizal for all the economics
ministers, as well as support from business leaders, should
enable the coordination team to create a conducive environment
for managing the economy.

Proper policy instruments, however small they may initially
seem, will increase the public's confidence in the government's
economic management, and this in turn will create an environment
for the introduction of other measures.

Local and foreign businesspeople do not expect all of the
problems to be resolved overnight, realizing that many measures
to improve the business and investment climate require
institutional reform and behavioral changes. But the business
community does expect the government to move quickly to
demonstrate its commitment to steady, concrete steps toward
economic reform, however small the steps may be.