Externals blamed for bleak showing

Externals blamed for bleak showing

Rendi A. Witular, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono blames external factors for
the government's failure to achieve several key economic goals
this year, setting aside criticism over the performance of his
economic ministers in bringing improvement to the economy.

The devastating tsunami disaster, higher global oil prices and
recent terrorist attacks on the resort island of Bali were all
used by Susilo to defend his economic team amid a growing calls
for a Cabinet shake-up.

"It has been a very tough first year for my government. There
have been several unpredictable incidents that caused several of
our economic targets to become unattainable this year," said
Susilo before a delegation of Japanese businessmen grouped under
the Japan External Trade Organization (JETRO) on Monday.

Susilo said the economic team's concentration in improving the
economy had been disrupted by these external factors.

He believed external factors played a key role in the
declining value of the rupiah against the U.S. dollar, as well as
the accelerated full-year inflation, which had surpassed the
government's initial single-digit estimation.

Susilo's remarks came days before the first year's anniversary
of his government that falls on Oct. 20, when he had pledged to
make a review of the performance of all his ministers. It is
unclear whether Susilo's statements defending his ministers are
an indicator that he may not reshuffle the government's economic
team.

Under the last revision of the state budget, the government
lowered its target for the rupiah exchange rate from Rp 9,500 to
Rp 9,800 to the dollar, despite the fact that the local currency
has been hovering at over Rp 10,000 for the past two months.

Some economics ministers have also upped their forecast for
full-year inflation from 8.6 percent to about 12 percent this
year, with the economic growth projection dropping from 6 percent
to 5.7 percent.

With lower growth, the government's target of reducing
unemployment by about three million is likely to be unattainable.
As of last year, the country's open unemployment stood at 10.3
million.

All this has led to mounting calls from analysts,
academicians, businessmen and legislators for a reshuffle in the
economic team.

Critics argue that the economy would not have been hit as hard
as it was by the external factors had the economic team, led by
Coordinating Minister for the Economy Aburizal Bakrie, provide
concrete and comprehensive economic policies as a buffer to such
problems.

Still, Susilo remained upbeat that the economy would be better
in the coming years, citing steady improvement in certain sectors
attained by his administration this year, including a rise in
exports and investment.

Meanwhile, during a meeting with the President, a JETRO
delegate conveyed his concern over rampant corruption, weak law
enforcement and uncertainty in the interpretation of law, which
had all discouraged foreign investors in doing business in
Indonesia.

"We believe that the government is determined to make the
business climate better. However, Japanese businesses,
particularly small-and-medium ones, are concerned about the
rampant corruption," said the businessman.

JETRO is a Japanese government-related organization that works
to promote mutual trade and investment between Japan and the rest
of the world.