Market signals for change

Market signals for change

With only two weeks before Indonesia's presidential election,
billed as the most democratic in the country since 1955,
increasing numbers of businesspeople have become more outspoken
about the qualities and characteristics expected in the new
president and her or his administration.

Many market players are even bolder in expressing their
opinions, hoping that the People's Consultative Assembly (MPR)
will seriously listen to the arguments that back up their
aspirations.

The associations of textile and exporting companies have
warned that the market economy, already crippled by the prolonged
multidimensional crisis, will totally collapse if President B.J.
Habibie remains in power. Most economists and foreign consultants
share the same view, noting the market is now in a desperate
condition, adrift aimlessly, because it no longer holds any trust
in the leadership of a man thrust by circumstance into the
presidency by Soeharto's resignation on May 21, 1998.

The President's staunch supporters understandably choose to
view these warnings as nothing more than attempts to derail the
Habibie presidential juggernaut. They may reject the opinions as
insulting to discerning minds, deriding the use of market
reaction as the yardstick to assess such an important political
process. They will no doubt argue that it is disdainful, if not
unfair, to measure a candidate's worth according to the rupiah,
stock price movements and other market parameters.

But this is not the first time Habibie's prospective ascent to
a higher position of power has agitated market sentiment. The
rupiah's exchange rate to the U.S. dollar plunged to an all-time
low in February 1998 after Soeharto's selection of the maverick
aeronautical engineer as his vice presidential running mate.
Singapore's senior statesman Lee Kuan Yew then made the same
observation, obviously for the good of his country's immediate
neighbor. Lee was right to state that when the market is
uncomfortable with a nation's leaders, all kinds of major
problems lie in store.

The stark truth is that almost all of the horrible
eventualities foreseen in the leadership combination of Soeharto
and Habibie have come to pass and continue to pound the country.
There has been huge capital flight, a virtual drying up of
capital inflow, bankruptcy of many companies, loss of jobs for
millions, with millions more finding themselves living below the
poverty line, not to mention the riots and unrest which have
caused untold suffering.

No wonder that while South Korea, Thailand and Malaysia, the
other countries most heavily hit by the region-wide contagion,
have returned to a path of respectable recovery, Indonesia's
economy remains mired in a deep recession.

Lawmakers in the MPR should realize that there is nothing
personal in the market players' assessment of President Habibie.
Whoever was in Habibie's seat would receive the same thumbs-down
if they showed the same equally appalling record on law
enforcement, public accountability, transparency and the
determination to combat corruption, collusion and nepotism -- the
main prerequisites for good governance.

It boils down to the plain fact that any leader bearing such
an outstandingly poor performance as Habibie during his short
term in office will not be able to build good governance,
foremost among the prerequisites to lead the nation out of its
crisis, and to regain the trust of the people. Slick maneuvering
and backroom money politics may keep Habibie in power, but
another term would be brief. A dissatisfied and unmerciful market
will assail him as relentlessly as it did to Soeharto until
Habibie, like his mentor, must finally bid goodbye to his ivory
tower.