Kadin still broadly supportive of economic team

President Susilo Bambang Yudhoyono is expected to reshuffle his Cabinet after serving for one year. Now there are strong public demands for the President to replace the Cabinet's economic team that is led by the Coordinating Minister for the Economy Aburizal Bakrie. The Jakarta Post's Rendi A. Witular talked with Chamber of Commerce and Industry (Kadin) chairman Mohamad S. Hidayat about the issue. The following is an excerpt from the conversation:

Question: How do you see the performance of the economic team so far?

Answer: Frankly speaking, this year has not been an easy time for the team as it has faced big external problems ranging from natural disasters such as earthquakes and tsunami, avian influenza outbreaks, high oil prices and the second terrorist attacks on the resort island of Bali.

The team spent much of its valuable time coping with these external factors. Consequently, it issued many "ad hoc" policies to address these problems. Take the fuel subsidy cut for instance; we fully support the government on this matter even though we have to take the heat.

The policy is unavoidable and painful in the short run, but it will have a positive impact in the long run for our state budget and fundamental economy. The positive effects include a stronger rupiah value against the U.S. dollar.

We understand that our government with the business community are working hand-in-hand to improve our economy, and it has shown positive results thus far.

In the second half of this year, investment is up 15 percent and exports have increased by as much as 10 percent. We expect economic growth this year to reach 5.7 percent despite the psychological impact of the fuel price hike, the bird flu outbreak and the Bali bombings.

The government is aiming to achieve an average economic growth rate of 6.6 percent annually for the next five years with a total US$426 billion worth of investment. However, this can only be achieved through capital inflows into the real sector and a high- level of export volume.

All these efforts will eventually lead to stronger foreign exchange reserves, lower unemployment, and more vibrant small- and medium- enterprises, which will drive our economic growth and competitiveness in the global economy.

Kadin has voiced its full support, and actively participated in the process of our national economic development. We have submitted to the government a roadmap on how to boost investment and trade in Indonesia.

Overall, your tone is fairly positive on the performance of the government. Do you actually feel comfortable with the current conditions?

In this regard, I would like to cover the facts equally between being critical and supportive. We criticized the government for its failure to be more efficient and more serious in tackling smuggling and the classic problems of the high-cost economy, including the high rate of terminal handling charges, illegal retributions related to both the central government and regional administrations, as well as problems in our tax regime. This is just to name a few.

The only way to win investors' confidence to come to Indonesia is by immediately taking necessary measures to address all of these problems by lessening the scope of unnecessary and unfriendly regulations, reducing tariffs and smoothing customs bureaucracy, as well as improving law enforcement. These will be part of our benchmark in evaluating the government's performance in the future.

So what are your suggestions for the economic team?

Moving forward towards the remaining four years of the administration, we would like to propose to the economic team to plan and organize comprehensive policies with matrices, timelines and progress charts in addressing all of the problems. This is to clearly enable the public to evaluate the progress made by the team as well as for the business community to see the direction of economic reform more concretely.