Looking beyond growth
Looking beyond growth
Indonesia's economic growth last year surpassed expectations.
This welcome news was disclosed yesterday (Thursday) by the State
Minister of National Development Planning, Ginandjar
Kartasasmita, after he reported the fact to the President at the
latter's Cendana residence.
This is clearly good news since it means that, when it comes
to growth, the government's development strategy has borne fruit.
The question now is: What about stability and equalization? We
know that each of these three aspects, known together as our
development trilogy, is a pillar of development that cannot stand
on its own. Greater growth means that more is available for fair
distribution among all, which makes for increased stability. On
the other hand, growth could also mean greater inequities because
the fruits of development are not distributed fairly, which could
upset stability.
As far as we can observe, enough has been done by the
government to promote equality, yet the results have been far
from optimal. According to a World Bank report, growth in eastern
Indonesia was 4 percent, which is only half the national average.
This clearly is a problem of strategic importance that needs to
be resolved.
Another problem of strategic importance concerns our
macroeconomic policy. As we can see, last year's and this year's
growth are supported mainly by the large inflows of direct
foreign investments, which increase our imports of capital goods
and the amount of private foreign loans. This, in turn, could
swell our current account deficit. To keep the current account
deficit within safe bounds, and to prevent capital flight, the
government must push exports while restraining the fiscal sector.
This could be done by continuing with the deregulation of sectors
that hamper exports, and by cutting subsidies that only benefit
the small, urban elite.
Attention should be paid to the alleviation of inequities in
big cities like Jakarta which could endanger stability. The best
way to achieve this is to be transparent in all aspects and
enforce the law without discrimination. If this is done, we are
sure that even higher growth, better equalization and greater
stability can be achieved.
-- Media Indonesia, Jakarta