Blueprint needed to face globalization

JAKARTA (JP): The Indonesian people will fall victim to free trade unless the government designs and implements policies that will develop a competitive economic base.

"I think we need to design a blueprint in all economic sectors that will enable us to see what we need to do in facing the process of globalization," said economist Rizal Ramli, the managing director of Econit, an industry, trade and economics advisory group.

Speaking at a discussion on how to design an effective economic policy for the globalization era, Rizal pointed out that in other countries such as Taiwan, South Korea and Japan, the government is on the side of the public and its small and medium scale businesses.

The discussion was organized by Forspin, a forum studying industry and investment issues.

"They also have conducive regulations for the small entrepreneurs to expand their businesses," he said, adding that Indonesia should work harder to fully mobilize the people's potential.

"We're currently too busy with short-term issues such as inflation, balance of payments and interest rates. But we don't pay enough attention to the macro-economy that includes the issue of utilizing the economic potential of the majority of the people," he said.

He cited Taiwan as an example, where about 80 percent of its economic power is held by small and medium-scale businesses.

Indonesia still has a strong concentration of businesses in every economic sector. A few conglomerates dominate the economy, leaving the majority of the general public with little room to do business.

He said that the main problems of the Indonesian economy are the issues of high profit margins and the massive capital accumulation of big companies. Further slowing the economy are the low margins and the public's slow accumulation of assets.

According to Rizal, economic gaps will continue to widen if the condition persists.

Fahmi Idris, an executive of both Golkar and the Indonesian Chamber of Commerce and Industry (Kadin), said that Indonesia must do more than change its economic policies. "It should also change its political system to allow bigger benefits for the general public."

The poor economic conditions of the majority of the people are partly due to the absence of direct relations between the ruling party and the general public, he said.

"In Indonesia we don't see any ties between the ruling party and the general public as we see in other countries," he said, citing Japan as an example where the government clearly protects its farmers.

He added that when a political party wins an election in Indonesia it should become the holder of political power and use its power to maximize the potential of the general public. (13)