Job creation a tough priority

JAKARTA (JP): While the mission of new Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti to make job creation his priority is appealing, experts warned its implementation faced wide-ranging problems arising out of labor disputes, regional autonomy, tax policies and upholding law and order.

National Economic Recovery Committee (KPEN) executive Anton J. Supit praised the plan, saying that since the economic crisis struck the country in 1997, the government had all but ignored the millions of jobless Indonesians.

"I never heard that (priority) coming from the previous governments," Anton told The Jakarta Post over the weekend.

Last week, Dorodjatun told the media that job creation was key to the country's economic recovery and thus would be his priority.

But Anton warned that making job creation a government priority, demanded strict discipline in its implementation.

Job creation, he said, entailed attracting investment, which in turn demanded a conducive business climate.

"We're talking about restoring law and order, improving tax and labor policies and tackling confusion over the regional autonomy," he explained.

The government, he said, should break down the task into workable policies covering all related sectors.

Anton suggested the new economic ministers meet local and foreign investors to understand the problems at the micro level.

One problem, he said, was that regional autonomy had made investment in the regions much harder.

He said that for instance, in some regions investors' permits from the Investment Coordinating Board (BKPM) had been ignored.

Separately, Lili Asdijudiredja executive of the Indonesian Textile Association (API) said government attention toward the jobless was long overdue.

"The government previously paid more attention to the welfare of those already working," he noted.

Lili further said a conducive business climate should not be only measured by a favorable rupiah-dollar exchange rate or interest rates.

"It's high time the government sees the real situation on the field," he said, referring to the rampant security problems many industries face.

Lili warned Indonesia's poor law and order situation could force foreign investors to relocate their industries to neighboring countries.

Last month, the Indonesian Chamber of Commerce and Industry (Kadin) had already urged the new government to focus on job creation.

It said past priorities on monetary stability by adopting a policy of high interest rates had come at the expense of promoting investment that would have otherwise created new jobs.

Indonesia's huge unemployment level of 40 million people was also liable to foster security risks, thus deterring investors, Kadin warned.

Meanwhile, economist Hadi Soesastro said Dorodjatun's aim to prioritize job creation was good in itself, but useless unless he explained how to achieve it.

"We need economic growth and a healthy fiscal to stimulate it," Hadi said.

According to him, with Indonesia's labor force growing by about 2 percent to 2.5 percent a year, the economy needs to grow by 7 percent to generate more jobs.

Last year, the country's economy grew by only 4.77 percent, with many economists betting on lower growth this year.

Foreign investment expert Harvey Goldstein of PT Harvest International Indonesia said focusing on unemployment implied the need for more direct investment.

But the government could hardly expect investors to come until investors' confusion over the regional autonomy had been purged.

Goldstein attributed this confusion partly on the ill-defined positions of local administrators in the government structure.

Chairman of the Indonesian Prosperity Trade Union (SBSI), Muchtar Pakpahan also hailed the government's new policy direction.

He pointed out that one of the key challenges was to change the mind-set of officials in the ministry of manpower.

According to him, officials there have no experience in finding people jobs.

Creating jobs, he said, demanded the government develop the economy in the rural sectors that absorbed most of Indonesia's workforce.

He cited the ministries of agriculture, forestry, marine resources, transportation, and tourism as capable of creating the most job opportunities.

"The government must synchronize each ministries' working plan, before drawing up a workable plan for creating jobs," he said.

He cited a 1998 SBSI research that showed the government must spend Rp 2.5 million for each person it wants to provide a job.(bkm)