Adi Sasono defends 'populist policies'

JAKARTA (JP): Minister of Cooperatives, Small and Medium Enterprises Adi Sasono parried yesterday the barrage of criticism leveled at the government's populist economic policy line, arguing it was the only way to feed the country's growing number of poor.

He said it was the government's responsibility to protect its people and the measures fell under its contingency action plan to set up social safety net programs.

"People are hungry," Adi told the National Deliberative Council of the Association of Indigenous Businessspeople.

Adi, a longtime staunch promoter of cooperatives and small and medium enterprises (SMEs), was responding to much criticism leveled at the government for churning out subsidies despite declining income.

Economists have derided the measures as political calculations to curry popular support. They warn that they are economically unsound and are leading the nation into bankruptcy.

Adi contended that providing subsidies would help the country contain outbreaks of social unrest, a growing phenomenon with widespread reports of looting and pillaging.

"The key word for social unrest, riots and looting is poverty. People loot because they are in dire straits," he said.

"I am a bit sad that this is still criticized as wasting money, while less criticism is directed toward the government for having to cover the private sector's debts."

The government estimates the economic crisis has caused a four-fold rise in the number of poor in the past year, reaching 80 million now from 22 million in the middle of last year.

It has allocated Rp 55.47 trillion (US$4.27 billion) for subsidies in the 1998/1999 State Budget, up from Rp 12.3 trillion approved earlier in January.

The amount consists of Rp 27.53 trillion of oil and fuel subsidies and Rp 27.95 trillion and other subsidies.

This year's budget deficit is expected to reach 8.5 percent of gross domestic product as the result of the increase in subsidies.

Adi said the money spent on the subsidies was less significant compared to the amount it was forced to spend on righting the ailing banking industry.

In examples of beneficial measures to the nation's poor, he cited the Rp 1.3 trillion allocated by the state to finance the studies of about 5 million children whose parents cannot afford to continue their school.

The government is also laying on an emergency program to help 7.35 million poor families in danger of food shortages. It sells them rice for Rp 1,000 per kilogram, or about a third of the regular price of the food staple

Each of the families is entitled to buy a monthly allotment of 10 kilogram of rice.

"When I went to see them in Central Java, these people could only afford half or a quarter of a kilogram, that's how poor they are."

Adi said the government would also help the SMEs and cooperatives take part in the distribution system of subsidized essential goods, such as cooking oil and sugar, by next year.

It will also provide credit guarantees and loans with subsidized interest rates to help them import the food products.

The program could reduce potential hoarding and abnormal price fluctuations created by food supply shortages, encourage fairness in trading and create jobs for 7.5 million to eight million people, he said.

A total of 6,700 cooperatives and 2,120 small and medium companies will enter the distribution sector, often singled out as a main contributing factor to high inflation.

Several banks, including Bank Muamalat and Bukopin, have agreed to help fund the program, he said. (das)