Don't cry for me Indonesia

Don't cry for me Indonesia

Sjahrir, Economist Chairman, Alliance for a New Indonesia (PIB), Jakarta

Part 2 of 2

A close look at the structure of Indonesia's state budget clearly reveals that the amount of money that must be available to pay off interest for the government bonds that far exceeds the budget for development.

If, as in the case of Argentina, some people point to excessive regional autonomy as the source of the crisis leading to uncontrollable foreign debts secured by provinces, then Indonesia faces eerily similar problems.

The case of PT Semen Gresik, where the government practically canceled the put-option plan by Cemex to acquire the majority of shares, indicates Jakarta's helplessness as a central government when it comes to the regional interpretation of regional autonomy throughout the archipelago.

Weak management can be said to have characterized the case of PT Tambang Timah, but it also involved a degree of interpretation of regional autonomy -- which led to mining activities outside the company's authority, albeit still within its authorized location.

We are still in the dark as far as the plans of Minister of Home Affairs Lt. Gen. Hari Sabarno regarding revisions of the regional autonomy law -- but developments in the regions will likely continue to make Jakarta a loser in the near future.

Unless it applies a firm and effective change of policy, that is.

Such a policy can only emerge with the coordination of macroeconomics and the management of macro politics. This calls for the optimum capacity of national leadership to enable a range of realistic policies to be felt by the region as sincere efforts by the government to get out of the crisis.

If officials even refuse to admit that the country is still in a crisis, will Indonesia ever be able to get out of it?

What is happening in Indonesia is a random development that can easily deceive us and, at the same time, create an erroneous conclusion of the real condition of the economy.

For example, the official statement on Indonesia's 3.4 percent growth -- second only to China's in Asia -- must be viewed within a more appropriate and historical context. Similar to Argentina, Indonesia has suffered the crisis for 52 months.

We must immediately cope with conditions at the microeconomic level -- as reflected in the underutilization of productive capacity, and huge foreign debt (with no foreseeable solution, without burdening people with increased taxation).

We do not see the economy awakening just because of some reports that the problems of some debtors to the government are considered settled.

Those who observe cases such as the Tanjung Jati power plant, or Chandra Asri, would immediately notice that the corporate factors are still filled with oceans of uncertainty which require correct and fast decisions.

Unclear policies -- whether Indonesia prioritizes its recovery, whether we wish to go on a witch hunt (after Bob Hasan, who's next?) or whether we wish to impoverish the tycoons.

The previous chief economics minister, for example, was deemed responsible for the impoverishment of a certain group of business people, while it was not clear recovery was the result.

All this indicates the ambiguous attitude of the current government officials.

Argentina is certainly not Indonesia.

Even its basic standards of economy are different, as reflected in the income per capita of US$7,500 versus $570 and average life expectancy (Argentina, 74; Indonesia, 66) as well as the economic structure (contribution from agriculture is only 5 percent in Argentina, while in Indonesia it is still 18 percent).

But, physical appearances aside, Buenos Aires is not all that much different from Jakarta.

In both metropolitan centers, luxury cars of the rich swarm the streets through throngs of people working the informal sector with a low income. Both capitals, moreover, share a marked unfairness in economic conditions.

So, although Argentina is not as corrupt as Indonesia, the embedded culture graft in both countries is an awesome force that can, at any time, melt the structure of economic institutions by producing powerful distortions in the economy.

Although both countries practice democracy, in Argentina there is a "longing" for the past, be it in the form of the "Peronista" or, here, the "Soeharto era" -- in essence, a strong desire to replace the stability that is missing from the politics of today.

If we view economic development from either a market perspective -- or a wider, public perspective -- it would be hard to imagine that the recurrence of the unrest that wracked Indonesia in May of 1998 is far from impossible.

This is not because the people "hate" President Megawati Soekarnoputri, like the students who protested violently against the New Order regime.

But the possibility lies in the similarities: Continuance of economic disparity and mental erosion felt by city residents suffering the fate of the marginalized -- those with incomes below the provincial wage standard, or those living below reasonable standards.

Scenes of middle class people attacking and looting supermarkets which we see happening in Argentina could very well take place here in Indonesia.

Only by focusing ourselves on reconstruction and recovery -- and the issuance of firm policies along with coordination of the entire cabinet -- can we erase the very well-founded fears that the Indonesia of 2002 could disturbingly become like Argentina at the end of 2001.