Economy strunggles over shaky political ground
Economy strunggles over shaky political ground
Umar Juoro, Jakarta
The strong political support that voters gave to directly
elected President Susilo Bambang Yudhoyono, and the take-over of
the largest political party Golkar by Vice President Jusuf Kalla,
has not yet turned the government into a powerhouse of effective
policymaking. Even the relationship between the president and his
VP is becoming a never-ending topic of speculation. The odd
relationship between the two -- on one side shows mutual
beneficial interaction, but on the other side is a source of
controversies -- is hard for the public to understand.
At the ministerial level, it quite often happens that one
minister will complain about another minister's policy for lack
of support and coordination. For example, the minister of energy
and his top officials have complained about the tax policies of
the minister of finance.
Similarly the minister of trade, who prefers liberalization,
does not get along with the policy of minister of agriculture and
minister of industry who are quite protectionist. The
responsibility of appointing directors of state owned enterprises
(SOEs) that used to be under jurisdiction of the minister of
state enterprises has been transferred into a a special board
chaired directly by the President with its members consisting of
the VP and several ministers.
The current investigations into possible lending frauds at
state-controlled Bank Mandiri and alleged corruption at the
General Election Commission (KPU) have caused political
speculation about possible rift within the administration.
These political speculations should not affect the government
if in reality the policy was cohesive enough and the
implementation was well coordinated. But, for an increasing
number of the elite, a cabinet reshuffle by the end of the year
is a forgone conclusion. The remaining question, though, is
whether a cabinet reshuffle would improve the policy making
process and policy implementation. This certainly depends on the
type of new cabinet itself.
In the wider political sphere, these political developments
are not that encouraging. Even though the House of
Representatives is no longer as hostile as in the very early days
of the administration, or before VP Kalla took over Golkar
chairmanship, there has not been strong moves as yet from the
House to help make Indonesia a better place for investment.
For example, the law on electricity that has been annulled by
the Constitutional Court and this court's decision that the oil
and gas law should be amended has not yet been followed up by the
House. Even the critical revisions to the 2005 state budget has
not yet been deliberated by the House.
The development of political parties as the base of democracy
is also very discouraging. With the possible exceptions of Golkar
and the Prosperous Justice Party (PKS), all political parties
face serious internal problems. The Indonesian Democratic Party
of Struggle (PDI-P) recently fired several if its top executives
for claimed disloyalty. The United Development Party (PPP) is
facing serious internal disputes among its top executives,
especially between the current leader Hamzah Haz with his
opponents, including two ministers in the administration.
Similarly, the conflict within the National Awakening Party
(PKB) is getting out of control due to the mounting rift between
the Abdurrahman Wahid's (Gus Dur) camp and the Alwi Shihab-
Syaifullah Jusuf camp, both of the latter being cabinet
ministers. The National Mandate Party (PAN), which recently
elected a new leader who is relatively unknown in political
circles, faces an uncertain future, as Amien Rais supporters in
Muhammadiyah prefer the creation of a new political party that is
closely affiliated with Muhammadiyah than that of PAN.
An interesting phenomenon is the infiltration by businessmen
into politics. Besides VP Kalla and Coordinating Minister
Aburizal Bakrie, PAN's new chairman Sutrisno Bachir is also a
businessman. The governors of Jambi, Riau, and Gorontalo
provinces, among others, are businessmen. This certainly inspires
other businessmen to get directly involved in politics.
Taking a positive point of view, the involvement of
businessmen in politics accentuates the importance of rational
economic policies at the central as well as local level. However,
this is also problematic as businessmen could take their own
interests into the public sphere, a common phenomenon during the
Soeharto era.
At the regional level, the behavior of provincial and district
elites who tend to run their regions for their own benefit is
very difficult to monitor by the central government. The direct
election of local chief executives (regents, mayors and
governors) beginning next month may well strengthen the political
independence of regional chiefs and this may also embolden them
to become defiant of the central government.
Fortunately, the president seems to have been able to
consolidate the military so that it focuses on its core task of
national security, and not messing in political affairs.
Nevertheless, the plan to put military-operated business under
the control of state is causing uneasiness among military top
brass.
With such diverse political power centers, it is very
difficult to get a cohesive political orchestra to facilitate
rational economic policy. Actually, the political elite, both at
the central and local level, are generally not against economic
liberalization, especially as it relates to foreign direct
investment, as long as they get direct benefit from it. However,
this goes against principles of good corporate governance and
business practice. The situation could well become more
complicated for negotiations of lucrative contracts that are
currently underway, such as Exxon oil contract in Cepu, Central
Java.
Ironically, in this democratic political climate, decisive
moves in the economic or legal fields, such as investigation into
the Bank Mandiri case, very much depends on the bold moves of the
President himself. It is hard to expect that ministers would be
able to coordinate themselves to solve interministerial problems.
However, to expect the president to act as a "powerful"
leader, as Soeharto did in his era, is certainly unrealistic.
Nevertheless, better political consolidation between the
President and his VP, no matter how odd the relationship, with
the support of Golkar that is supposed to have wider
representation in the new cabinet later on, should give a very
strong political base for sustainable economic policies.
The support of smaller political parties, especially the
Democratic Party and PKS, will add to the political weight of the
government. Meanwhile, as local administrations are no longer
subordinate of the central government, a reasonable strategic
cooperation with at least certain local administrations,
especially with strategic economic resources, would certainly
help to create conducive environment for investment.
The writer is chairman of CIDES (Center for Information and
Development Studies), and a senior fellow at the Habibie Center.