Healthy climate essential to economic recovery

Healthy climate essential to economic recovery

Economist Sri Mulyani Indrawati, a member of the National
Economic Council (DEN), talked to The Jakarta Post about
obstacles hampering the country's economic recovery.

Question: How do you view the economic recovery process?

Answer: Generally, the framework is understood. The more
difficult problem is how to create a climate and supporting
institutions to accelerate the framework.

A good climate is necessary. This includes politics and the
government's attention, starting from the President, Cabinet
ministers and officials of local administrations.

The institution should include values and a game plan, for
everyone, not only for formal organizations or bodies.

Q: On what basis does the process work?

A: It works eventually with the democratization process which
requires better and higher participation, transparency and
accountability.

Unfortunately, many officials are neither ready for this
change nor realize the new realities. They often are shocked and
even worse. Some of them may still think that they can ask
others in public institutions to support their own hidden
agendas. They don't care that good governance is the name of the
game in this postcrisis era.

Q: What does DEN propose?

A: Much. We can't give the details. Trickiest of all, perhaps,
is how to communicate our proposals to the President and that he
will pay attention to them, making them a priority in his
decisions.

Q: How do you rate DEN's progress?

A: I would define progress from the point of organizational
aspects in that we continue to meet weekly. We also will continue
to develop the economic framework. This will be finalized soon
and made known to the public. Some of the policies are for the
medium and long terms, including studies on policies which will
be formed soon, the implementation of autonomy and its problems,
the fuel subsidy and state credit program.

DEN is focusing on the medium and long term as well as
structural problems, while the assisting team is acting like the
firefighters, focusing mainly on the letter of intent (LoI) with
the International Monetary Fund (IMF).

Q: Can Indonesia meet the targets with the IMF in fulfilling all
the reform measures stipulated in the LoI?

A: Yes, if we are talking about quantitative targets, which
include growth, inflation, monetary quantity, net reserves and
the current account surplus. I believe Indonesia can also meet
the targeted deadline for amending regulations and
recapitalization.

If the target is about quality, meaning institutional change
and attitudes for better governance, I think we will need a
longer period. We still need to fight various groups with vested
interests. So, the answer greatly depends on how we interpret the
target.

Q: Are you satisfied with what DEN has done?

A: More or less, it's hard to say that it has already fulfilled
my hopes. Internally, DEN is quite focused and effective but
regarding our client, the President and the government, I think
they frequently leave us confused. They are not focused.
Political affairs, I think, remain the priority of the President.

His response concerning economic problems has been limited to
actions to set up various institutions, appointing and assigning
several people there. This has raised questions about advisers to
the President, and whether the assigned people can work
effectively and will not confuse him even more.

DEN has taken the initiative to communicate with other parties
with similar functions, at least to inform them that DEN has a
program. Sometimes, affiliated ministers have asked us to meet.
So, if everyone is sincere and has goodwill, problems among
presidential advisory bodies can be handled.

Q: How is cooperation among economic ministers?

A: I cannot answer that, it's not ethical to meddle in their
work mechanism. We can see the cooperation and togetherness among
them from their output, both in the substance of the policies
which should be supporting and strengthening each other and in
the implementation of the policies which should be methodical and
adequately received by the public.

Q: Foreign investors remain reluctant to invest in Indonesia and
are maintaining a wait-and-see attitude ...

A: No wonder. The government has yet to become solid, as the
frequent political changes attest. The recent Cabinet reshuffle
and the general assembly in August have raised many technical
questions.

There are numerous cases involving major companies like
Indorayon, Newmont and Freeport which have yet to be completely
resolved. We don't see and understand yet a firm position from
the government. What the public wants is also unclear. Cases of
failed bankruptcy petitions give the impression that the
government is not really in full control of the process of
decision making and implementing. It has left investors in doubt.

Q: Standard & Poor's recently downgraded its foreign currency
issuer credit rating on Indonesia. Do you think it was related to
the President's attitude toward his administration?

A: I don't think so. Check the clarification from the central
bank, Bank Indonesia, about this. (I. Christianto)