Mega achieves little economic progress say expert

Mega achieves little economic progress say expert

A'an Suryana, The Jakarta Post, Jakarta

President Megawati Soekarnoputri has failed to quicken the
pace of economic recovery during her first year in power, despite
a more stable domestic political situation, economists said on
Monday.

They said that although macroeconomic indicators had generally
improved during the first half of this year, crucial economic
programs such as privatization and the sale of assets under the
Indonesian Bank Restructuring Agency (IBRA) continued to be in
trouble. The performance of exports and foreign direct investment
(FDI) were also a big disappointment.

"Megawati had a chance when she assumed power last year.
However, she has failed to take advantage of the strong support
given by the people and investors to improve the economy," said
Pande Radja Silalahi, an economist at the Centre for Strategic
and International Studies (CSIS).

Megawati, the daughter of the country's first president,
Soekarno, took office on July 23, 2001. At the time, Megawati was
very popular among the public, raising high hopes that she could
expedite the recovery of the country's economy, which contracted
by nearly 14 percent in 1998.

But many economists say Megawati has failed to turn the
positive momentum to benefit the economy because she lacks the
courage to take difficult economic policies swiftly. She has also
failed to curb corruption and improve the country's legal system.

"Megawati has no vision and leadership. She also has no sense
of urgency and does not know which policy she should prioritize
to spur economic growth," said Didik J. Rachbini, an economist at
the Institute for Development, Economics and Finance (Indef).

One prominent example is the case of resolving the huge debts
that former bank owners owe the government. Although there was
strong pressure from the public, Megawati did not take decisive
action to force delinquent debtors to pay up.

The macroeconomic economic picture, however, has been
improving during Megawati's leadership. In April, the rupiah
managed to strengthen to a nine-month high of around Rp 8,500 per
U.S. dollar, although it has started to weaken to around Rp 9,000
lately amid high demand from the corporate sector to repay
foreign debts. Inflationary pressure is also easing, allowing the
central bank to lower the domestic interest rate environment.

But exports and FDI are declining.

Exports tumbled to US$22.285 billion between January and May
this year from $24.503 billion in the same period last year.

FDI approvals plunged by 59 percent to $1.67 billion in the
January to May period, from $3.98 billion posted during the same
period last year.

"Indonesia's export figures have fallen sharply, but Megawati
remains silent," said Pande.

"Macroeconomic indicators are progressing, but not as high as
people have expected," said economist Raden Pardede.

Some, however, are still hoping Megawati can quickly improve
her leadership, particularly with regards to the economy.

Didik said that to accelerate economic recovery, Megawati must
have the courage to take difficult economic policies.

"Legal reform and combating corruption must also become a top
priority to accelerate economy recovery," said Raden.