Greater courage needed to face the reality

Indonesia's economic crisis bites deep and spares no one. Wimar Witoelar, a TV host and public affairs commentator, reflects on this issue and suggests possibile wayout.

JAKARTA (JP): It must be a bad dream. The canceled vacation trips, computer replacement and office furnishing plans are abandoned like the mega projects we were so satisfied to finally get out of the way.

These are trivial sacrifices compared to the plight we see everyday of more and more workers without jobs and families without incomes.

Quiet desperation hidden by the stoic facades of people trained to accept fate. As if trapped in a deep well as the rising water level threatens to drown us, we watch the steadily rising prices.

First with a sense of amazement how this could have happened, then with horror as we realize that our buying power has sunk to 20 percent of six months ago.

Thinking analytically gives some perspective, as we realize many more people are worse off than middle class people are like us are. The poor and deprived have to fight for their very survival, the rich and powerful have their castles crumble into dust.

The only rescue is to have the financial system start to pump life into the economy. Before the Idul Fitri holidays, the government deployed the first of the last weapons of defense. the central bank issued sweeping regulations, which guaranteed claims on local banks from both depositors and creditors.

A special body is set up to restructure ailing banks. Strange, market response has been cool and cautious, and many do not understand the implications. Good policy initiatives are diluted by panic measures adding to the confusion.

A powerful businessman falls out of favor and out of sight, ancient regulations take away travelers' money at the airport and a new one imposes a stiff exit tax on people who are supposed to prepare for AFTA and be more aggressive in exports and being better internationalists in general.

Misdirected solidarity symbols make it more difficult to see the problem clearly. As people turn against each other, unscrupulous propagandists bring out sentiments against the ethnic Chinese and foreign governments.

This distracts attention away from twenty years of government corruption and business collusion with the power elite, which have made an economic crisis out of international monetary turbulence.

The problem from the beginning has been very clear. The solution is simple if we face the reality of bad government. Government is part of the problem, but it requires courage just to say that.

Many say that the key to economic stabilization is the handling of our US$65 billion private sector debt. The market is nervous because of fears of a general moratorium on the payment of private-sector debt, according to one rating agency. Radius Prawiro as the President's appointee to find a solution is on his toughest assignment yet, as an encore to a highly successful career. But if he does not recognize the simplicity of the problem, this will be mission impossible.

Although the Japanese are our largest creditor at more than $23 billion, it is interesting to see the reaction of U.S. bankers. The difference in their attitude towards South Korea's debt and ours reveals the nature of our situation. Backed by U.S. government pressure, they are likely to roll over their loans in Korea, a supportive position they are unlikely to adopt in Indonesia under current circumstances.

This stark differentiation in fact points to the most important principle to grasp in seeking a way out of our national crisis.

Let us look closer to the reasons why U.S. bankers prefer South Korea to Indonesia. First, South Korea is a military ally of the U.S. But that is not the key issue. The key strength of the South Korean recovery is that the country has just elected a person with a reputation for total commitment to democratic reform. Hence the U.S. and the IMF see the fundamentals in the country as positive.

Indonesia, in contrast, is suffering under a 32-year regime, almost certain of extension over the silent protest of a large segment of the literate public. Korea is a good business risk: Indonesia is a leaky bucket into which addition of water will just leak out again into our high cost economy. There is no indication that the nation's leadership has repented the lack of ethics and blatant violation of all sound business practices and statesmanship.

Prawiro has to overcome a market highly skeptical of the Indonesian government's political will. He is not equipped to face the challenge of returning national confidence, because it requires a political will absent in his technocratic tradition. He, like many otherwise smart officials lack the kind of political will to present the problem in terms of its roots.

Lacking that courage, the representatives of the people in the MPR will not even go through the exercise of evaluating options to come out of the crisis, which could call for an orderly change of national leadership.

Y.B. Mangunwijaya said in this newspaper last week that we are very strange people. We all know what the problem is. We all know the cause of the problem, we all know that we need fresh leadership to deal with the problem. We know that ultimately change will happen because it is inevitable. But nobody wants to take the initiative.

Now there is really no choice. The choice of a new leader has to be made on rational considerations. It is not a matter of preference or even loyalty to the current leadership. They are dragging the nation down by failing to detach their vested interests from the national interest, and they are even dragging themselves and their families down by not gracefully accepting reality.

An orderly transition of power under national consensus will open the door to a quick solution to the national crisis. First the private sector debt will be rescheduled like in South Korea. This will invite the return of direct foreign investments and capital into the Jakarta Stock Exchange. IMF and bilateral assistance can be concentrated on macro economic housekeeping as an empowered population will continue the momentum of political reform. The bonus of a clean government is ours if we choose the right leader. This will tone down the high cost economy and improve our international competitiveness.

With the remaining weakness of our currency we will have all the tools of a genuine export drive. Indonesia will emerge as a strong economic power, this time without the illusion created by financial pyramiding.

All the components of a recovery scenario will be available if we have the courage to act in the national interest. Our representatives in the MPR that they will earn the nation's gratitude and the world's respect for remembering that they are, after all, representatives of the people and not of anyone else. This will be the moment of truth in a simple but historical political process.

Editorial -- Page 4