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.