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.