More than ten years after the financial crisis which led to costly restructuring and reform, Indonesia's economy is no better off, according to experts.
In some cases, the economy is in even worse shape.
In a public lecture, University of Indonesia economist Faisal H. Basri said Indonesia is rated one of the least competitive among 55 countries, down 5 points from number 49 in 2003.
In addition, he said, it had also dropped from being one of the three most promising countries for overseas business operations in Asia-Pacific in 1997 to one of the least favorable: number nine out of 10 countries in the region.
"One of the most significant changes that we see today is that the quality of our economic growth has worsened," Faisal said in a lecture organized by the Faculty of Social and Political Sciences marking 10 years since the economic crisis.
He said the non-tradable sectors -- such as services -- grew rapidly but provided few jobs, were centralized in large cities and capital-intensive. The tradable sectors -- especially agriculture and manufacturing, he said, were struggling to survive.
Faisal concluded that Indonesia's economy was fragile as it depended on a patchwork of economic policies offering only short-term benefits.
"The need for the government to revise the budget just one month after it was finalized is a simple example," he said, referring to revisions in January of key assumptions in the 2008 state budget.
In fact, the government revised the figure once again only a few weeks later.
Separately, another economist, Ichsanudin Noorsy, said Indonesia's decrease in competitiveness was caused by the country's inability to meet "SSA" (speed, stamina and accuracy) benchmarks.
"The government is crippled by the rapid changes happening in the world and lacks the stamina to find synergy between market mechanisms and market institutions. It has also made inaccurate predictions resulting in ineffective policies."
He said the current economy resembled conditions during the colonial era when foreigners controlled most of the country's natural resources and domestic companies preferred to sell their products abroad for higher profits.
Faisal recommended the government improve the quality of the institutions which are major determinants of prosperity and continuity and invest more in research and development.
Meanwhile, Ichsanudin suggested the government optimize the utilization of all natural resources available in synergy with capital resources.
"In optimizing the utilization of natural resources, for example, we should enhance our depleting oil wells and make use of the vast non-productive land in the country." (lva)
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