Govt role needed in economic deregulation

JAKARTA (JP): The process of economic liberalization in developing countries needs their governments' roles through economic planning to ensure that it will run well, without instigating destabilization, economist Dorodjatun Kuntjoro-Jakti says.

"The functions of governments' economic planning are not only for regulation and nationalization processes, but also for deregulation and privatization advances," Dorodjatun said at a ceremony for his promotion as a new professor in the School of Economics of the University of Indonesia on Saturday.

Dorodjatun said that in the current era of globalization, the role of governments through economic planning remains a strategic element of economic development processes.

He presented five arguments on the importance of governments' touch on economic development planning. He described the five reasons as follows.

* Development is not an instantaneous and/or automatic process. It needs stimulators and a long time to experience changes in different stages. Governments' roles through their economic policies are needed to maintain the continuity and consistency of development process.

* Development goes on not without funds and side effects. In terms of dislocation of funds, particularly when it creates negative impacts such as unemployment, governments have to hastily intervene to avoid instability, which can disrupt the continuity of the development.

* Knowledge about development has been largely accumulated, which results in the emergence of a common view in the process of economic development. With such accumulated knowledge, governments could identify any deviation of the economic development at the very early stage, and thus they can correct the deviation quickly.

* The modern economy, especially in the era of information, is full of data, information and sciences. The governments, with their large bureaucratic networks, can provide all of them. The macro-economic policy, therefore, will remain a specialty of governments.

* Globalization brings about many quantum leaps, which will, sooner or later, result in discontinuities. To anticipate all uncertainties, governments should reduce the risks for the sake of the continuity of economic activities.

Success

However, Dorodjatun noted that the success requirements of the liberalization process are difficult to meet, especially by developing countries.

Success conditions include professional government officials, governments' strong political supports for economic liberalization, national consensus on ways to liberalize the economy and the availability of accurate data and information to support the liberalization process.

"Looking at the four success requirements, it can be predicted that many developing countries will not be able to counter the incessant globalization onslaughts," Dorodjatun said.

He noted that the Indonesian government's role in the country's economic planning is vital, to ensure that economic liberalization will not lead to a laissez faire, or an etatism, or a free fight liberalism. (rid)