Economy worsens, reshuffle won't help: Economists
JAKARTA (JP): Last week's outrageous riots have severely damaged Indonesia's economy, and a mere cabinet reshuffle will have little impact on the recovery process, economists said yesterday.
"It is a devastating catastrophe... the unrest has caused our economic system to collapse," Laksamana Sukardi told The Jakarta Post yesterday.
Laksamana, a director of Econit advisory group, said the riots had disrupted upstream and downstream activities.
"There is no flow from production to service, we may face a shortage in food supply," he said.
Jakarta was rocked by three days of rioting which started on Wednesday, during which crowds vandalized cars and buildings and went on looting sprees in shops and shopping malls, some of which they set fire to.
This prompted a massive exodus of expatriates and ethnic Chinese. The latter are frequently the target of angry mobs during periods of social unrest.
Laksamana said the departure of expatriates would paralyze the operation of multinational companies here, while the flight of the ethnic Chinese would hamper the distribution of goods because they control a large part of the retail sector.
Umar Juoro from the Center for Information and Development Studies, a think tank affiliated to the Association of Indonesian Moslem Intellectuals, said the crisis was deepening and it might take as long as three months just to return to the conditions immediately before the riots.
"The (economic) recovery will not only slow down but also lose its momentum," Umar told the Post.
Both the economists forecast that inflation this year would reach as high as 100 percent. The International Monetary Fund (IMF) initially forecast an inflation rate of 47 percent.
Economic growth this year may drop as low as minus 10 percent, considerably lower than the official projection of 4 percent.
They said President Soeharto's decision to reshuffle his cabinet, in a bid to comply with growing criticism directed at some of his ministerial appointments, would be unlikely to restore confidence in the government.
"It's a good move, but it's too late," Laksamana said.
"We had chances to restore confidence six months ago, but they were all wasted," he said, citing the General Session of the People's Consultative Assembly (MPR) in the March and the subsequent selection of a new cabinet as examples of wasted opportunities.
The current cabinet consists of Soeharto's daughter Siti Hardijanti Rukmana and his long-term friend Mohamad "Bob" Hasan, among many close associates.
I Nyoman Moena, former Bank Indonesia director, said the reshuffle would restore confidence only if the government established a credible cabinet line up.
"If the people see a government free of nepotism and collusion, it may regain the support of the nation," Moena said.
But both Umar and Laksamana said they remained skeptical that any new faces brought in would gain the trust of the whole nation.
"Those who are credible and have vision will stay away from the regime because they will be buried," Laksamana said.
"They will not want to be seen taking sides against the people," Umar said.
Laksamana said the current "obsolete government" needed total regeneration.
He said the national leaders must show their sincerity to see through thorough reforms without dwelling too much on the issue of constitutionality.
"Change must be facilitated by our leader, be it through stepping down or through constitutional changes."
"But without any sincerity, we will be dragged further into a bottomless abyss," Laksamana said.
Umar said the reshuffle must be followed by complete political reform, including reselecting MPR members, many of whom are linked with nepotism, and a peaceful leadership transition through an extraordinary session of the MPR. (das)