Current signs show recovery still years away

By Santo Koesoebjono

This is the second of two articles on necessary efforts to overcome the economic crisis in Indonesia.

WASSENAAR, the Netherlands (JP): The crumbling Indonesian economy, occurring in such a short time and with such severity, is a great shock to all Indonesians. Disappointment and disillusion are huge. People on the street bear the hardest blow and the harsh consequences of the economic slump.

Disappointment is deeper among the poor in Jakarta. But does the economic and financial downturn hit hard the urban elite who have fared well in the trail of the regime and have enjoyed the fruits of the "corruption-collusion-nepotism era"?

It is ironic to hear members of this elite saying that they feel they are also being fooled by the government, even though they themselves hold high posts and have received prerogatives from this regime.

Although the elite may not live as comfortably as before the reform, they can still afford to live lavishly and go abroad. Notwithstanding skyrocketing prices, they can manage to buy what they need. It is true that these people must take a few steps back and cannot go abroad as frequently as before, but they can still shop abroad.

This is totally different from the situation of a large part of the middle class that is slipping down to join the army of the poor, to form an extended societal underclass, the main source of social unrest.

After the transfer of power on May 21, a minister of the present Cabinet and his family visited the Netherlands. Their program included the usual tour around the shops. Recently, an Indonesian guide tried to make reservations in a four-star hotel for several ladies on a tour through several European countries using business class air tickets.

Hearing members of the elite claim they are concerned about the situation is one thing, but to be faced with their actual way of life is another.

For the moment, the large majority of the people are enduring pain from the legacy of the former regime. Poor agricultural output, ongoing layoffs, spiraling prices and decreasing participation in education and medical care are the ingredients for social unrest.

It cannot go on like this any longer. Social upheaval will become more frequent, fierce and violent. In the second half of this century, developing countries have witnessed frequent eruptions of social upheaval and waves of protests of the poor moving toward urban cities.

Although thorough analysis in the media is seldom obtained, it should be acknowledged that social upheaval never comes as a big bang. It is part of a social process occurring over a long period. Social unrest is simmering below the surface of the societal fabric and a tiny spark can ignite the fire. Only when it becomes serious will the elite then perceive it as a big bang initiated by a number of bad guys.

It is no longer the time to give alms or to talk about grandiose projects, such as the Java-Sumatra bridge, in national and international media. It is time instead to develop income- generating activities together with the urban poor and the rural people.

Indonesia is a people-rich country, with 65 percent of the population living in rural areas. Labor intensive agriculture- based projects are likely to be appropriate. The population knows what they want. Accepting and complying with the people's demands is a much better approach than the top-down and central government-decided approach.

There are sufficient channels to carry out activities, as indicated by the presence of a large number of non-governmental organizations (NGOs). In the past, such organizations were involved in developing and implementing projects for the poor and destitute in circumstances that were often difficult and opposed by the authorities. Nevertheless, many of them were successful in using the funds to help the poor.

It is little wonder that Indonesian and foreign agencies demand the right to channel the foreign funds directly to NGOs rather than through government bodies. This is a sign of no confidence. Right they are, since in the past it was a common practice for government institutions to ask for 40 percent of a project's funding provided as a loan by international agencies.

Even the World Bank has recently stated that at least 20 percent of the project money in Indonesia was siphoned off by corrupt official. Regardless of graft, loans should be paid back in full and the population must bear the burden of the debt.

In early 1996, The Economist weekly magazine stated that the political and economic system in Indonesia was unfair. It warned that "even low-key protests serve as a reminder that, if the system is seen as corrupt and unjust, the poor will seek other forms of redress".

Lack of nine basic commodities in various parts of the country forms the basis for explosive popular protests. The longer the government postpones taking serious action in improving their fate, the greater chance the protest will explode.

The elite can join and support NGOs if they are really concerned in helping the poor and not merely wanting to ease their own conscience. After all, Indonesians are a gotong-royong (mutual-help) society. Give something that the people need the most. Food first, other stuff later.

The writer is an economist-demographer based in the Netherlands.