Government told to focus on unemployment

JAKARTA (JP): The Indonesian Chamber of Commerce and Industry (Kadin) has called on the government to focus on the creation of more job opportunities in its new economic agenda.

Kadin chairman Aburizal Bakrie said on Thursday that creating job opportunities should become the government's primary objective.

"All other policies should either comply with or support this primary objective," Aburizal said in a media conference.

He said the government's past policies, which were mostly focused on efforts to protect the rupiah and ease inflationary pressures, had discouraged investment activities.

Bank Indonesia has been keeping interest rates high to ease pressure on the rupiah and stall inflation. In response, the banking sector raised interest rates to prevent an outflow of deposit funds into Bank Indonesia promissory notes.

This activity, however, discouraged industries from making new investments that would otherwise have helped create new job opportunities.

Aburizal said that the new government must reverse the priorities, despite concerns over the rupiah and inflation.

"Thus, the primary objective of more job opportunities must be higher than that of maintaining the rupiah's value," he said.

Aburizal added that Indonesia's high unemployment rate was liable to foster insecurity, with more people being tempted to break the law.

"We have 40 million unemployed Indonesians, all thinking the same thing: how to get food on the table," he said.

The deterioration of law and order has been among the main barriers deterring the entrance of foreign investors.

Existing investors in the mining, oil and gas, and forestry industries have complained about unrestrained crimes such as theft, extortion and violent protests.

Aburizal said that without the flow of foreign investment, expecting a turnaround in Indonesia's economy was difficult.

National Economic Recovery Committee (KPEN) executive Sofjan Wanandi suggested that poor coordination between the government and the central bank had contributed to weakening the rupiah.

With this in mind, he added, the immediate reshuffling of Bank Indonesia's board of governors was inevitable.

"Don't wait for the IMF's six months, the central bank amendment must be finalized quickly," he said referring to a deal with the International Monetary Fund (IMF) delaying the central bank law amendment for another six months.

Commenting on the next Cabinet line up, Sofjan and Aburizal urged the new economic team to show greater consistency in its policies.

To this end, they said, the coordinating minister for the economy should hold "special powers" to ensure the consistency of all government policies affecting the economy.

According to Aburizal, President Megawati should insist that major economic policies are approved by the coordinating minister.

All ministries whose policies may impact on the economy should report, consult and seek the approval of the coordinating minister, Sofjan explained.

In the past, he said, conflicting government policies confused investors and dealt a blow to the country's legal certainty.

He also urged for an economic team featuring professional members capable of working as a team.

"We don't want superstars in the economic team that don't know how to cooperate," he said.

According to him, the old team had been ineffective because of relentless politicking between its ministers.

Sofjan further called for a reduction of ministries to allow the government to address the country's economic woes more quickly.

According to him, the past few months' political bickering has slowed down the government's work and stalled economic recovery.

Political observers suggested, however, that the new Cabinet would most likely be fat rather than slim, as President Megawati faces pressure for political compromises.

Although she leads the country's largest party, the Indonesian Democratic Party of Struggle (PDI-P), her presidential victory was not without the help of rival parties such as Golkar and Islamic parties grouped under the Axis Force.

At present, the government consists of 26 ministries; raising the number would inevitably add pressure to the already stressed state budget. (bkm)