Doubts cloud potency of economic recovery decree

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.