Govt policy offers some hope for future

Govt policy offers some hope for future

Rizal Mallarangeng, Director, Freedom Institute, Jakarta,
rizal@freedom-institute.org

Slowly, a clearer direction is appearing on the horizon. It is
hard to overstate the difficulties and pain Indonesia went
through after the fall of its strongman Soeharto in 1998, but the
worst is already behind us.

Democracy was confused with weakness: This was the basic
mistake in the early years of the country's democratic
transition. Soeharto was both strong and authoritarian, so to
dispense with the latter, we also had to avoid the former. This
line of thinking, although rarely made explicit, was quite
popular. Only a few people of significance in the intellectual
and political arenas thought that the kind of government the
country needed was both a strong and democratic one.

In the meantime, the public was suspicious of any action by
the government that appeared decisive and resolute. The
government, on the other hand, was uncertain of itself. To what
extent could its authority be exercised without harming liberty?
What was the appropriate boundary between the two?

Especially under Abdurrahman Wahid's rule from October 1999 to
July 2001, such confusion combined with a weak political base and
personal failings, making it a dangerous mix. At one point, there
seemed to be no authority at all, only dispirited state officials
who were afraid even to lift their fingers. The human costs were
terrible, particularly when ethno-religious conflicts in several
areas turned the lives of locals into direct manifestations of a
Hobbessian existence -- nasty, brutish and short.

This, for instance, was evident in Sampit, Kalimantan, in
February 2001. Without any clear direction from their superiors,
the local police and military officers were only standing by,
watching in humiliation while hundreds of Madurese, including
women and children, were butchered over several days by the local
people. It was one of the darkest moments in the country's
democratic transition.

When Megawati Soekarnoputri replaced Wahid in July 2001,
nobody expected her to perform superbly -- and she hasn't. But
one thing was clear from the start: She wouldn't repeat past
mistakes. Intuitively, she understood that democracy could not
work without stability, and that to achieve both, Indonesia
needed a strong government.

This changed the balance, especially when the public mood also
began to swing toward the same direction. Sure, Megawati at times
seemed to be in doubt or flip-flopping. Worse, on more than one
occasion she appeared before the public a withdrawn leader,
turning a blind eye and deaf ear to the controversial issues of
the day.

But when it came to the most crucial decisions, she usually
made the right ones and stubbornly stuck to them. And sometimes,
there was also a bonus: She made them quickly. This, for
instance, could be seen after the Bali bombing on Oct. 12 last
year.

After receiving briefings on that horrific terrorist act from
her coordinating ministers at her private residence, very early
in the morning of Oct. 13, she took only a few hours to set her
basic course of action. On that crucial morning, Megawati was at
her best: Controlling her anger and sadness, listening quietly to
several different people, taking the problem head-on. And four
days later, defying sharp criticisms from human rights advocates
and influential Islamic leaders, she announced her major move,
exercising her constitutionally granted right to fight back: She
enacted the Antiterrorism Law. This policy turned out to be a big
success.

Her most recent bold action is in Aceh. She offered reasonable
compromises to the armed separatist rebels. She even let
international entities to come to Aceh to play the role of
observers and conflict mediators. But after a year, when her
offer was rejected by the rebels and after close consultation
with legislators, she finally made up her mind and sent 26,000
soldiers to restore order.

It is still difficult to predict the outcome in Aceh, but
whatever may ensue, the government has shown that democracy does
not mean indecisiveness.

James Madison, one of the greatest political intellectuals in
American history, said that before a government is asked to
control itself, it is important that a government should be able
to control the governed. Megawati has yet to improve her track
record on strengthening the mechanisms of check and balance,
which are important to safeguard the future of Indonesian
democracy, but it is hard to deny the fact that she has made
quite an accomplishment by showing that her government can
actually govern.

A clearer direction can be seen on the economic front as well.
Under Wahid, nobody knew what the government was up to. He
changed his policies as often as he sacked his ministers. The
market was nervous, and Indonesia's chances of recovering quickly
had faded away.

Megawati inherited a ruined economy. She didn't have any
experience as an finance manager. However, she was at least --
unlike her predecessor -- predictable from the start. She also
had good instinct in choosing a senior economist, Dr. Boediono,
to lead the ministry of finance and entrusting him with
developing the macroeconomic policy.

True, many things still remain to be settled. The
privatization programs are moving slowly and uncertainly, while
IBRA (Indonesian Banking Restructuring Agency) has yet to perform
well, and a credible plan is still being discussed as to how the
country will finance its debts and fiscal deficit after
graduating from the IMF programs late this year.

But by continuously applying sound macroeconomic policies, the
government has restored some degree of market confidence. Money
from abroad is returning: The mutual funds have been rapidly
increasing over the past months and foreign direct investments
are starting to pick up in number again. The latest survey of
Danareksa Research Institute shows the Consumer Confidence Index
improving in the last three months, after falling quite a bit
between October 2002 and February 2003.

Most likely, the country's GDP growth this year will be around
3.8 percent, which is still low compared to the pre-crisis
standard. But, barring a force majeure, it will not be surprising
if the growth rate shoots up to 4.5 percent in 2004. A six- or
seven percent annual GDP growth is still a dream. But slowly, we
are making our way to it, not retreating from it.

Next year, for the first time, the people will choose their
president in a direct election. By providing greater legitimacy
to the presidency, I expect the next government will be even
stronger. Will the dynamics of the election ruin the economy? I
doubt it. No politicians will set back the basic policy courses
that are now in place, if they want to have any chances of being
elected to the number one position.

Yes, the future remains uncertain. But after a long, dark
tunnel, it feels good to see the light again.