Basic-needs approach

There were few new policies revealed during the two separate question-and-answer sessions held with presidential candidates Megawati Soekarnoputri and Susilo Bambang Yudhoyono and a panel of four economists on Wednesday evening.

The quality of these forums was nevertheless improved as both candidates took a basic-needs approach to the complex economic problems the country faces, and the thought processes evident at the meeting were down to earth. They aptly demonstrated a broad comprehension of the basic economic issues and the enormous challenges immediately confronting the incoming government.

Both candidates gave much attention to the problem of unemployment, one of the main causes of poverty in the country, candidly describing how jobs could generate wages, which in turn would create purchasing power to fuel demand for goods and services. This virtuous circle in turn would produce tax revenues for the state to fund public services and maintain and build infrastructure.

Jobs are indeed what are badly needed by the estimated 10 million unemployed and more than 30 million under-employed people. Jobs are also the most important thing the 38 million people currently living in absolute poverty need to escape their deprivation. The experiences of countries that have succeeded in reducing poverty show the majority of people who escape from poverty do so by taking up new employment.

Both presidential aspirants demonstrated they realized economic growth was the key to generating jobs and reducing poverty, and that the economy would never expand without investment. But the economic plan the candidates promoted during the forums also showed their awareness of the severe restrictions the state budget would face during the next five years due to the huge domestic and foreign debt burdens and the ballooning cost of fuel subsidies. Hence, they looked to the private sector to be the main locomotive of growth.

The candidates reiterated the vital need to reinvigorate domestic and foreign investment through the improvement of governance, regulatory and legal frameworks, basic infrastructure and labor regulations. They rightly concluded it is a vibrant private, not public, sector that creates most jobs.

But private investors are only willing to infuse capital if the investment atmosphere allows for a reasonable calculation of business risks and if the competitiveness of the economy improves significantly. But now, due to structural problems and poor basic infrastructure, our economy is far more inefficient than our neighboring countries. Consequently, the capital costs of business ventures in Indonesia are much higher, and manufacturing companies have to bear higher inventory costs due to uncertainty in port-handling and an inefficient and corrupt customs service.

It is yet comforting to note the significant improvement of Megawati's communication skills, although Susilo in comparison remained much more eloquent and articulate in elaborating his points. This doesn't mean, however, that Susilo's economic plan is better than Megawati's. In fact, Susilo's platform is similar to most of the programs currently implemented by the Megawati administration. The encouraging development though is the keener attention paid by both candidates to the importance of good communication.

Whoever takes over the government next month needs to be a great communicator and deal-maker; so as to develop a political consensus at the House of Representatives, and reach out to the people to build public support for their program. The next president should also possess a great sense of patience in dealing with differences of opinion in the House and in the nation as a whole, especially when addressing critics.