Job creation tops the list of Mega's economic platform

Zakki P. Hakim, Jakarta

President Megawati Soekarnoputri and her running mate, Hasyim Muzadi, promise to create millions of new jobs in the next five years if she gets reelected for a second term in the upcoming election.

But critics have said that this is an area where she has generally failed so far.

In a document describing the economic platform of the pair, the economy is envisaged to grow by an average of 6.8 percent per year, peaking at 7.9 percent in 2009, in order to create some 12.9 million jobs during the five-year period. This, in turn, is expected to significantly resolve pressing unemployment problems.

Although the current Megawati administration has been applauded by many for successfully stabilizing the country's macroeconomic indicators such as inflation and interest rates, it has failed to transform this into higher economic growth, mainly due to a lack of fresh investment amid lingering legal uncertainty, corruption and security problems.

The economy has been growing at a mediocre rate of around 4 percent during the past couple of years, mainly driven by domestic consumption. Economic growth needs to accelerate to 6 percent to 7 percent per year in order to create sufficient jobs for the millions of unemployed. Higher investment is crucial to the acceleration of economic growth.

High unemployment has been the most pressing problem since the country tumbled into an economic crisis in the late 1990s. The country's open unemployment figure is around 10.5 million, while people living below the poverty line total around 40 million (of the country's 220 million population).

But Megawati is confident that investment will return.

"Most of the investment would be financed from domestic sources," stated the economic platform document, adding that to achieve the above growth target, a huge investment of around 27.1 percent of gross domestic product (GDP) would be needed.

According to the document, the unemployment rate is projected to fall to 6.3 percent in 2009 from last year's 9.5 percent.

As part of a job creation program, the Megawati-Hasyim duo will also empower small and medium-scale enterprises by providing easier access to bank loans, with priority in the eastern part of Indonesia.

The pair also sees the agriculture sector as playing a dominant role in absorbing unemployment and plans an average 2.8 percent growth in this sector, compared with the 2.1 percent realized from 2001 to 2003.

The Megawati government plans incentives for farmers.

Apart from job creation, other agenda items that top the list in Megawati's economic platform are maintaining fiscal sustainability and improving the international competitiveness of the local economy.

The government's debt level will be reduced to 32.8 percent of GDP in 2009 from this year's estimate of 64.4 percent.

Reducing the debt will involve an attempt to trim the budget deficit by strengthening fiscal sustainability through higher tax revenue, new foreign debt management and efficiency in government expenses.

Despite the controversy on Indonesian workers abroad, the pair supports the sending of more workers as a solution to help improve conditions for the domestic workforce.