How to put Indonesia back on the right track

James Kallman, PT Grant Thornton Indonesia, Management Consultancy, Jakarta

A recent piece in The Jakarta Post reminded me of how far we are from making the tough decisions that must be made if this nation is to get back on track.

It's bad enough that the State Minister of Administrative Reforms Feisal Tamin should be forced to admit that only 40 percent of the nation's four million civil servants are professional and perform their jobs well. What is worse however is accepting this as a burden the government must bear, citing the extra expense to the state in providing severance pay if the unprofessional civil servants were to be dismissed.

This is just the old-fashioned thinking that continues to hold the country back. It's all right to say, "for the time being we can only encourage them to work harder and improve their job performance," but this only compounds the problem. For by next year there'll be another year's service to add to their severance pay. And as has been found in countries the world over, the security of working for the government -- be it in state-owned companies or the civil service -- has never been the greatest spur to productivity and self-fulfillment.

No, the simple truth is that we cannot afford not to dismiss those who are incapable of performing their job in a professional manner. That is what happens in the private sector and there can be no exceptions for the governmental sector. Facing the challenges of globalization, and 2020 is already beginning to loom large, it is a case of either shaping up or shipping out.

Simple logic also tells us that if 60 percent are not performing properly, then the other 40 percent must be shouldering the load. Thus in reality, Indonesia does not need one civil servant for every 50 or so of its citizens. The point is not lost either that if we had fewer civil servants then we could afford to pay them better. This would both reduce their need to bolster their current paltry incomes by nefarious actions and attract a higher quality of future intake.

Some might argue that with some 40 percent of the nation's 100 million workforce currently either unemployed or underemployed, now is not the time to take such action. This is the call too from employees of state-owned industries who decry privatization out of the fear of losing their jobs. But in the age of globalization everyone must pull their weight and it is a government's duty to ensure that its civil service is both efficient and cost effective.

This is not to suggest that we should cut the unprofessional workers adrift. Far from it, for a portion of their severance payments could be earmarked to help them establish small micro- businesses, which in reality form the backbone of the local economy.

Thus instead of adding to the unemployment figures there would in fact be job creation, as each business would need an extra pair of hands or two. Plus this would be productive work that adds to the circulation of money within the economy. For despite their essential nature, civil servants do not contribute a single rupiah to the nation's GNP.

Restructuring is a word bandied about in upper echelons, but unless the political will exists to put it into practice there will be no international belief in Indonesia's seriousness in tackling its economic problems. And at the present time, international credibility is of vital importance in attracting foreign investment, which has been on a steady decline since the late 1990s. Indonesia remains the only country in the region with capital flight.

That restructuring builds investor confidence can be seen in the movements on international stock markets. Companies that carry out radical rather than piecemeal restructuring are rewarded by more robust share prices.Investors are prepared to shrug off the one off costs of the restructuring process, realizing that the company has recognized its past complacency and tackled its problems in a positive manner.

What holds true for individual companies also holds true for nations. Indonesia is by no means alone in countries that have undergone economic and political crises in recent times, for in many ways Indonesia's problems are mirrored in the current woes of Argentina, or in the not so distant past, Mexico.

Yet there are examples closer to home, economically afflicted at the same time as Indonesia. Thailand and South Korea however have shown far more resilience in bouncing back, particularly the latter that has enforced restructuring despite opposition from its workers.

Government is not about winning popularity contests, but about taking the actions necessary to produce future benefit for the populace as a whole. At times these actions may not be popular, but if the government is open and honest in explaining the necessity for its policies then the majority of the electorate will tighten its belt and look forward to the benefits that will in time accrue.

Failure to formulate and implement such actions constitutes a betrayal of the people's trust, which in a true democracy usually results in a change of leadership at the next elections. This is why we can't afford not to make those tough decisions necessary to put Indonesia back on the right track; and not tomorrow or next year, but now.