Greater courage needed to face the reality

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