Arrest nation's increasing misery

Arrest nation's increasing misery

By Omar Halim

JAKARTA (JP): After the government of president Soeharto
signed the second Letter of Intent with the IMF in late January,
the author wrote an article in this newspaper entitled "Economic
reform without misery?"

Since then, significant changes have taken place. The student
demonstrations, which spread throughout the archipelago, were
followed by violent riots, particularly in Solo and Jakarta. On
May 21, president Soeharto resigned and was succeeded by vice
president B.J. Habibie.

The departure of Soeharto may have calmed the students to some
extent, but confidence in the Indonesian rupiah has not returned.
The extensive looting, burning, raping and killing further
exacerbated the situation, not only because of the resultant
capital flight but also because foreign capital has become more
reluctant to flow into the country.

Chief of the Armed Forces Gen. Wiranto has said that such
violence would not be tolerated in the future. Beyond this,
however, other action has to be taken. It was stated in my
article that "...it is where the country and the economy are
heading in the next five years that will determine whether
confidence will return. It is therefore imperative that a regime
which can elicit full trust be elected to lead the country..."

It was further argued that this regime should be able to
undertake essentially three types of reform: economic and
financial, political and judiciary.

In the article, it was further argued that "...with the
prospect of such reforms in the next five years, the country
would be turned into one governed more transparently, rationally
and with fairness. There seems to be no doubt that confidence,
especially among Indonesians, would return".

By the time President Habibie assumed presidential
responsibilities, almost all groups, including those that had
been part of the old regime, had embraced the idea that the
country needed extensive reform, as the courageous university
students had demanded. Regarding the required reforms, the
crucial questions now are (a) whether President Habibie's
government is capable of taking the lead in undertaking the
reforms and (b) what reforms specifically should be undertaken.

Earlier in June, President Habibie took the lead by announcing
a time-table of reforms to be undertaken, culminating in the
election of the new president and vice president by mid-December
1999. The reform measures include the revision of the electoral
law, the law on the composition of the People's Consultative
Assembly and House of Representatives and that on political
parties. Minister of Justice Muladi has also announced that other
laws, such as the anti-corruption law and the subversion law, are
being reevaluated.

This initiative should be welcomed. It is now incumbent upon
Indonesian society to respond and indicate whether the scope of
the specific measures being considered are comprehensive enough
to reform the political, legal and judicial systems making the
legislative, executive and judiciary branches of government
independent of each other; for the system to be fully responsive
to the aspirations of the people; to make the decision-making
process transparent and decentralized; to provide a level field
for all; and to enable future leaders to emerge from the
grassroots level.

The economic system should provide equal opportunities
for all, be free of extraneous costs to enable it to compete
fiercely in the era of globalization, while purposefully lifting
the majority economically disadvantaged groups to fully
contribute to and benefit from the national wealth.

For the systems to be reformed expediently, a tight schedule
for discussion of the reform proposals is necessary. It should be
noted that the armed forces have prepared an extensive set of
reform proposals covering the political, legal and economic
fields.

For this purpose, the proreform groups which reflect the
opinion of the majority of Indonesians, should establish joint
working groups to evaluate the government's specific proposals
and provide the necessary input to the government and the
reformed legislature.

The role of the government and other national leaders in
focusing the public debate is extremely crucial. Otherwise,
public discussions and actions will be haphazard, unfocused and
unproductive. A clear and agreed upon national agenda would no
doubt provide a national sense of purpose and assure the local
population and foreigners alike that Indonesia intends to prepare
itself to successfully face the 21st century.

Meanwhile, the international community could support the
efforts of Indonesians by providing assistance programs such as
food and medicine to ensure a stable environment so that the
people could go on debating alternative reform measures and to
expediently take the necessary decisions to overhaul the existing
system. The environment will not be stable if the economy, as
expected, declines drastically in the coming months.

In mid-May we witnessed the extensive destruction caused by
the people's frustration with economic hardship and
dissatisfaction over the wide gap in the distribution of incomes
and wealth. The continuing deterioration of economic conditions;
bankruptcies, increasing unemployment (which is estimated to have
reached 20 million), soaring prices of basic commodities and
other goods; will all severely affect the poor, especially in
urban areas.

"Food riots" could become more commonplace and seriously
insecure conditions could emerge throughout the country, or at
least in heavily populated areas. The reform movement could be
thwarted and confidence in the Indonesian economy would further
evaporate.

This is an extremely urgent and important task. The government
could formulate a two-year economic program, in which the
policies and programs implemented during the first year focus on
reducing unemployment, launching intensive labor projects in
rural areas, increasing the income of the poor, increasing the
supply and domestic production of food and other basic
necessities, and increasing the export of goods with minimal or
no import content.

The projects should be as labor-intensive as possible and
could include the building of infrastructure in rural areas and
the regions outside the island of Java.

Other longer-term development projects could be postponed.
Since the magnitude of the problem has grown so large, the amount
of IMF funds during the first year, together with the
supplementary multilateral and bilateral funds, should be
massive.

If the policies and programs of the first year were effective,
the second year policies and programs could start being oriented
toward more development-oriented projects.

The economic and social conditions in Indonesia have
deteriorated substantially in the last two months. Neither
Indonesians nor the international community should allow
political limbo to set in, since the cost to the nation could be
very high indeed.

The writer is an economic and political analyst residing in
Jakarta.