Corruption-free government key to recovery: Economist

JAKARTA (JP): A new and clean government resulting from the general election in June, the first since long-reigning president Soeharto stepped down last May, is the key to Indonesia's economic recovery, an economist has said.

Sri Mulyani told a dialog forum of the National Front grouping of retired Armed Forces generals that without a clean government, it would be nearly impossible to restore the economy, as local and international confidence has been severely eroded.

"We don't have the luxury of being given a completely clean government within a few months, but we need a relatively credible one at the very least," she said, adding the current government had lost its credibility.

The economic woes, which caused the rupiah to spiral downward since mid-1997, have been worsened by structural problems in business and financial sectors as well the monetary system, which lacks prudent management, she said.

But it was the government's lack of credibility that continued to undermine Indonesia, while other countries in the region also battered by the crisis showed more resilience, she said.

Although the government had set out on economic reforms overseen by the International Monetary Fund, it had been unable to "reactivate" the economy because its reputation was damaged.

Sri said the solution was to fix the structurally flawed government by electing a clean and qualified president with the right priorities, she said.

To be credible, the president must have a clean reputation, be open and honest with the public, and should cultivate a system of checks and balances on those in power.

The president's aides must be the most reputable people, she said.

She claimed that some members in the cabinet of President B.J. Habibie, who replaced Soeharto when he resigned in May, still had dubious reputations that hampered efforts to restore the economy.

"If Habibie had appointed the right people, perhaps the problems would be solved by now," she said.

Under Soeharto's autocratic administration, economic growth remained high up until the start of the monetary crisis, but perceived power abuses and shady business deals among his circle of friends caused wide disparities in the distribution of wealth.

Sri also expressed concerns that the ruling Golkar party, Soeharto's political vehicle that enabled him to stay in power for 32 years, would abuse its power to gain public support by using its vast wealth and populist policies

Habibie, a senior member of Golkar, has been tipped to be the party's presidential candidate. Some key members of his cabinet are major Golkar functionaries, including party chairman Akbar Tandjung, who is minister/state secretary.

Political observers have expressed concerns that the government would market policies in favor of the public in the run-up to the elections, or simply buy votes for Golkar.

Sri cited reports of the chairman of the supreme advisory, A.A. Baramuli, handing out money to the audience during a Golkar campaign.

"It seems that these people now don't even have to have a good reputation because they have money," she said.

She agreed that if some of the government's economic policies were seen to succeed, this would boost Golkar's foundering credibility.

Its "people-oriented" economy, a campaign promoted by Minister of Cooperatives and Small Enterprises Adi Sasono, was one of the populist policies formulated to win public favor.

"Adi's concept of empowering indigenous small and medium enterprises may be a form of affirmative action to promote equality, but I'm worried that this would discourage competitiveness in the business sector," she said, adding this policy would make opportunities for new cronies. (das)