Doubts cloud potency of economic recovery decree
Dadan Wijaksana and A'an Suryana, The Jakarta Post, Jakarta
Economists voiced their doubt that the People's Consultative Assembly (MPR) decree on economic recovery could accelerate a recovery process because it did not provide more power to the government to execute key economic policies.
Raden Pardede of the Danareksa Research Institute said on Monday that the government was often locked in endless debates with legislators when talking about critical economic measures to help push for a faster economic recovery.
"We cannot expect the government to push for higher growth, while at the same time the House often gives the government a hard time whenever it executes policies," he told The Jakarta Post.
The decree on economic recovery, issued by the MPR during its Annual Session, ending on Sunday, is meant to provide general guidelines for the government to speed up the country's economic recovery process.
On many occasions, the government's privatization and asset sale programs have met with delays due to strong rejection from lawmakers.
As a consequence, the government has only managed to raise some Rp 2.26 trillion of the Rp 6.5 trillion (US$715 million) of privatization proceeds targeted for this year.
Raden said that without the support of the legislature and other state institutions, such as the judicature, it would be impossible for the government as an executive to speed up the recovery process.
He said that the role of the judicature was also crucial, particularly in boosting legal certainty.
Serious legal uncertainty has been one of the factors discouraging foreign investors from returning to the country.
The need for a special Assembly decree on economic recovery has often come up as progress has been slow in lifting the country out of its economic slump, which resulted from the late 1990s devastating economic crisis.
The country's economy, which contracted by nearly 14 percent in 1998, is moving at a slow pace and failing to keep up with the need for sufficient job creation to absorb the millions of people put out of work by the crisis.
Apparent setbacks in several economic indicators, such as exports and investments, have only added to the pressure for efforts to push the recovery process.
The National Development Planning Agency (Bappenas) has painted an even bleaker outlook, projecting the country's economy to grow this year by only about 3 percent, which is below the state budget's target of 4 percent.
The modest growth would only absorb 1.5 million workers, which is way below the estimate of 2.5 million new jobseekers this year.
Meanwhile, economist Pande Radja Silalahi also said that the decree would not be effective as it merely provided recommendations and lacked specific measures.
Pande lashed out at broad statements made by the Assembly in the decree, saying that the MPR should detail the items.
"We know that investments are crucial to propel economic growth, however, the Assembly has failed in the decree to stipulate measures on how to increase investments," he said.
The Assembly should show the government how to raise investments, such as what the government should do to assure domestic security and legal certainty.
The MPR decree on economic recovery stipulates five policy principles and 10 policy recommendations.