Cabinet takes heat for sluggish economic recovery

JAKARTA (JP): The country should not expect to see any major new foreign investment for at least a year due to security concerns and political uncertainty over the work of the Cabinet, a senior economic adviser said.

National Business Development Council chairman Sofyan Wanandi said on Wednesday that apart from the obvious concerns over security, there were also questions about the effectiveness of the government's economic team.

"I cannot see foreign investors entering the country in the first year (of the new government) due to the bad law enforcement we have now," Sofyan said.

Speaking on the sidelines of a seminar at the Centre for Strategic Studies, Sofyan said he was aware of hundreds of complaints from businesspeople about the lack of a stable and secure environment.

He also said the impending 15 percent to 55 percent hike of regional minimum wages was a concern among investors, noting that there were these wage hikes on one hand while on the other hand security could not be guaranteed.

"I will have a meeting with the President on Friday to discuss these problems. And I really hope we can all reach a consensus between the businesspeople and laborers on the salaries before April," Sofyan said.

Foreign investors expect an increase in their overhead costs because the government plans numerous hikes, including of regional minimum wages and electricity rates, beginning on April 1.

Sofyan hinted that part of the reluctance of foreign investors stemmed from their wariness of President Abdurrahman Wahid's economic team, which, despite an impressive lineup, had yet to present any real concrete solutions to improve the battered economy.

According to Sofyan, who also heads the Gemala Group, the recent establishment of economic boards was a result of the economic team's failure to perform effectively.

"Once the economy is back on track, there is no need for these boards and they should be disbanded," he said, referring to his own council formed in December and the Emil Salim-led National Economic Council formed in November.

However, Sofyan refused to blame the stagnant economic solely on the government's economic team.

"This is a coalition Cabinet, we have to give it more time to get to know each other and harmonize their potentials," he remarked.

In his view, the economic team in the Cabinet, the core of which comprises Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie, Minister of Finance Bambang Sudibyo, Minister of Industry and Trade Yusuf Kalla and State Minister of Investment and State Enterprises Development Laksamana Sukardi, should be given until the end of the year before personnel changes are considered.

"They just started working, we should give them time, maybe until the end of this year .... There are many handicaps slowing the (economic) recovery," he said.

Reshuffle

Sofyan's remarks were in stark contrast to those of other political observers, who seemed to have lost patience with the work of the government's economic team.

Economist Pande Radja Silalahi told the Post the President should contemplate making changes to the team as the country's economy remained stagnant and there were no signs of new investment.

He said the economic team lacked clear priorities and goals. "The government should have set certain goals and priorities for the economy," Pande said, adding that without defined priorities no immediate improvements would occur.

He also concurred with the view that once the economy got back on its feet the members of the economic boards should serve as mere advisers, without being directly involved in economic matters.

"They (the boards) should not interfere anymore with the country's practical economic affairs," Pande said.

Mochtar Pabotinggi of the Indonesian Institute of Sciences also urged the President to reshuffle his Cabinet, which he said lacked priorities in repairing the economy.

"Priorities and goals are very important ... Gus Dur has to set some to enhance the performance of the Cabinet," Mochtar said, referring to the President by his nickname.

But Mochtar did not say which ministers he believed should be replaced. "I cannot mention names but I suggest a total reshuffle of the Cabinet, especially in the two fields (of economy and law)."

Meanwhile, Sofyan, when asked about his reported feud with Kwik, said there might be a misunderstanding between them but it was far from a serious dispute.

"Me and Pak Kwik, as Pak Kwik said last night, have known each other for a long time. There's only a slight misunderstanding that has been exploited by outsiders to oppose my opinions with those of Pak Kwik," Sofyan remarked.

Kwik and Sofyan reportedly are embroiled in a dispute over policy and the work of their respective institutions. (dja)