Government told to focus on unemployment

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)