Jakarta governor misleads public, say economists

Damar Harsanto, The Jakarta Post, Jakarta

Economists warned that Governor Sutiyoso's 2001 budget speech could give a misleading impression to the public about the actual economic situation in the capital.

Director of the Institute for Development of Economics and Finance (Indef), Bustanul Arifin, as well as Center for Information and Development Studies (Cides) director, Umar Juoro, cast doubt on the use of gross regional product per capita to measure wealth, even though Sutiyoso had claimed it was "a macroeconomic indicator of the people's welfare".

"Economists never use gross regional product to measure public welfare. It is misleading as it doesn't reflect the actual situation," Bustanul told The Jakarta Post on Monday.

Gross regional product is the monetary value of all the goods and services generated by a local economy over the year.

Sutiyoso claimed in his budget speech last week that the capital's economic situation was much improved, pointing to Jakarta's gross regional product as evidence of this. Quoting data from the Jakarta branch of Central Bureau of Statistics (BPS), he said that gross regional product per capita last year jumped by a significant 15 percent to Rp 25 million (about US$2,500) from Rp 22 million in 2000.

Paramita Dewi of the Jakarta BPS said that the use of gross regional product was irrelevant in reflecting the city's actual economic situation due to the fact that Jakarta also served as the Indonesian capital so that it hosted many corporate headquarters and government institutions.

"All output from both private and state institutions, including Bank Indonesia, are recorded in Jakarta's gross regional product. This is divided by the number of Jakarta residents, a total of 8.3 million people last year," Paramita said.

That's why the big outcome (of gross regional product) is not comparable with the statistical reports of other provinces, she said.

The country's economy grew by 3.32 percent last year, as against 4.8 percent in 2000. The government has targeted the country's economy to grow by up to 4.0 percent this year.

In his speech, Sutiyoso stated that the economic growth of the capital had declined slightly by 0.34 percent to 3.64 percent as compared to 2000's figure of 3.98 percent, while the inflation rate barely increased to 11.52 percent last year from 10.29 percent the previous year.

Umar Juoro said that Sutiyoso's figures clearly showed that Jakarta's economy was far from recovering, as claimed by Sutiyoso.

"Besides, economic growth over the last two years has nothing to do with the performance of the administration. It must be attributed to the painstaking efforts of the business sector to survive amid the country's economic slump rather than the result of the government's policies," Umar said.

Sutiyoso's administration, which had introduced no major policies to help business, thus could not claim the credit for the growth, as the governor had tried to do in his speech.

Instead of trying to claim credit for success, Sutiyoso's administration should focus on the welfare of residents by addressing such problems as increasing unemployment and poverty among those living in Jakarta, Umar said.

The City Council is scheduled to present its response to Sutiyoso's speech on Tuesday.

The speech itself has been criticized by some councillors as ignoring public concerns over the administration's failure to prevent the recent floods or improve waste management.