Analysts call for "Indonesia Incorporated"

JAKARTA (JP): Rapid changes towards globalization of economic activities require Indonesian firms to adjust their operational strategies and the government to introduce more deregulation, analysts say.

Many feel that an interlocking economy similar to that of Japan may be the answer.

"The government and private companies must adjust quickly or Indonesia will fall behind in the global economy," Hadi Soesastro, an economist from the Centre for Strategic and International Studies (CSIS), said in a seminar here yesterday.

Hadi said the current economic trends were forcing Indonesian firms to gain access to information about developments in global and regional markets, technology and skilled workers.

The economist also said that the government must adopt policies to shape a condition which allows companies to have access to those "indispensable items."

"The government can become, for example, a sort of a 'clearing house' of information which will then be passed on to various companies," he said.

He asserted that quick adjustments to the changing world economy can only be achieved with a close coordination between the government and the business sector. "In short, we need an Indonesian Incorporated."

Transparency

Nevertheless, Hadi warned that "Indonesian Incorporated" must be based on transparency and accountability. This is yet to be fully achieved, he said.

The analyst also argued that the government needs to develop focused technological and educational policies to quicken the required adjustment process.

"It is unfortunate that tax incentives are not allowed under our tax laws," Hadi said.

Indonesia's taxation policies only give incentives for companies which invest in this country's under developed eastern parts.

On the same occasion, economist Dorodjatun Kuntjara Djakti from the University of Indonesia also emphasized that Indonesian firms must have an access to global information on the latest technology. "Without it, you will be in a state of panic," Dorodjatun said.

The economist also appealed that the government be more aggressive in promoting foreign capital to expand the country's industrial sector which presently only contributes 10 percent of the Gross Domestic Production (GDP).

Dorodjatun said that the non-oil industrial sector should be expanded to 20 percent of GDP from only 15 percent at present. (04/icn)