Commission agrees on economic recovery
Fitri Wulandari, The Jakarta Post, Jakarta
Commission B at the People's Consultative Assembly (MPR) Annual Session agreed on Sunday to a draft economic recovery decree but failed to give a clear-cut strategy on how to accelerate the economic recovery process.
"The decree is necessary as a political umbrella for economic recovery as the current process has failed to meet expectations," Chairunnisa of the Golkar Party faction, the second largest party, told the commission hearing on Sunday.
MPR's Commission B is tasked with drafting four MPR decrees, including on economic recovery.
Factions cited a lack of coordination among government institutions, legal and security uncertainty, political instability and rampant corruption as the main factors that had stalled the process.
The economic recovery decree is supposedly aimed at providing the government with guidelines for difficult economic policies, including privatization, reducing subsidies and public debt management to help avoid disputes between government officials and legislators.
The draft recommends, among other things, creating legal and security certainty to lure investors, correcting relations with international creditors and managing the state budget by optimizing tax revenue.
Economists have criticized the draft as "too general and lacking in clear-cut guidelines".
Take foreign debt, for example, which amounted to 54 percent of the total foreign and domestic debt of US$135 billion.
The draft recommends renegotiation with international creditors for a hair cut, rescheduling and conversion to ease the burden of foreign debt in the state budget.
Economists have also suggested that the government push for a debt for poverty reduction swap and a debt to public utility swap in order to ease the burden of foreign debt in the state budget while serving public interests.
On the privatization of state-owned enterprises (SOEs) to tap the budget deficit and to revive foreign investor confidence, the draft recommends selective privatization.
Economists have suggested that privatization of SOEs should be based on increasing efficiency and transparency to eliminate corruption.
The government has failed to meet the target of Rp 6.5 trillion (about US$718 million) in privatization proceeds. It has only managed to rake up Rp 2.6 trillion as political opposition, including from the House, to selling state assets to foreigners remains strong, including to the high-profile sale of PT Semen Gresik.
In Sunday's session, the legislators urged the government to review its relations, particularly with the International Monetary Fund (IMF), considered to have reduced the country's independency in taking its own economic policy.
"Imbalanced relations with international organizations needs to be corrected, particularly with the IMF," Chairunnisa added.
Legislators, however, did not specify what sort of action was needed to reduce dependency on the IMF.
MPR recommendations for economic recovery: (1) Clean central and regional government, (2) Legal certainty to lure investors, (3) Balanced relations with international creditors, (4) Renegotiate foreign debt to get a hair cut and rescheduling (5) Managing the state budget effectively through optimizing tax revenue and selective privatization of SOEs, (6) Strengthening commitment to small- and middle-sized enterprises (SMEs).