Last chance for economy

President Megawati Soekarnoputri is quite right in her urgent appeal to the leaders of political and social organizations, as well as the whole population, to maintain self-restraint in exercising their democratic rights, otherwise the country would appear to be in chaos and be shunned by the international community.

Speaking at the Annual Session of the People's Consultative Assembly on Thursday, Megawati sadly noted that domestic and foreign investment had virtually come to a halt because the country was perceived to be highly unstable and fragile, with high economic, political and security risks.

She is again quite correct in selecting strong and sustainable economic recovery as the government's top priority. Indeed, the multi-dimensional crisis that has gripped the nation since mid- 1997 started out as a financial debacle, which immediately damaged the whole economy and later destroyed the public's trust in the then political system developed by the Soeharto administration. Hence, it was primarily the economic crisis, not pro-democracy street demonstrations, that brought Soeharto down from his more than three decades of authoritarian rule.

But as the crisis is now entering its fifth year and after the government has spent the equivalent of hundreds of billions of dollars in taxpayers' money to repair the damage, things are not much better. The overall condition has instead become much worse, with the government already on the verge of bankruptcy under mountains of domestic and foreign debts, many productive assets remaining idle due to security risks or a lack of liquidity, and the huge number of unemployed people steadily increasing as more enterprises stop operations because of depressed market demand.

Why is our condition still much worse than Thailand, South Korea, Malaysia and the Philippines, which were hit by similar economic crises in 1997 but are now experiencing sustainable recoveries on the back of reforms that are largely similar to the ones Indonesia has formulated?

The answer lies in the sense of urgency in coping with the crisis. While the other crisis-ridden countries acted immediately and firmly by mobilizing all their political, social and economic resources to attack their economic woes, Indonesia has been embroiled in political bickering and scapegoating.

Even though our condition is much more complex than the other countries in that we are learning democratic principles in the middle of an economic crisis, we could have done much better had the government and all political and social organizations put aside their respective agenda and interests, and united in managing the economic crisis.

It is therefore most imperative now that the government and the House of Representatives fully unite in pushing through all the reform measures, notably asset recovery, corporate debt restructuring and privatization programs, which are vital to returning the economy to a path of sustainable recovery. Without significant progress in these programs, the recapitalized banks will remain as crippled as they are now. Without a sound financial system the economy will never be able to resume sustainable recovery.

The House should do away with its misguided nationalistic sentiment regarding what reforms would bring our economy under foreign domination. The blunt fact is that we are now in such a dire condition that we will never be able to rebuild our economy without a heavy dose of foreign capital. And we should not forget that foreign capital also brings higher standards of accountability, transparency and corporate governance, which are also key prerequisites to supporting a strong economic recovery.

On the other hand, we should also remember that it was corruption, collusion and miserably low standards of accountability within the public and private sectors that were primarily responsible for destroying the foundations of our economy.

This is our last chance to repair the economy. If we are not able to stabilize our economy and restore it to a path of recovery during the current Megawati administration, we will not be able to conduct a peaceful succession of government in 2004. Worse still, the people, so frustrated with their prolonged suffering, may completely lose trust in the rule of law and the democratization process.