Last chance for economy

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.