Modest grade for Susilo's one-year showing: LIPI

Modest grade for Susilo's one-year showing: LIPI

The Jakarta Post, Jakarta

After one year in power, President Susilo Bambang Yudhoyono and
his economics team have so far failed to live up to expectations,
with the economy -- both macro and micro -- showing little sign
of improvement, revealed a study by the Indonesian Institute of
Sciences (LIPI).

In fact, in terms of macroeconomic management, the current
economics team's performance is weaker than the team under
Megawati Soekarnoputri, the head of the team of researchers,
Widjaya Adi, said when presenting the study on Friday.

Susilo replaced Megawati as President last year.

"In terms of the macroeconomic management under the current
government, inflation and Bank Indonesia's benchmark (SBI)
interest rate are going up while the rupiah is weakening.

"The situation was different during the administration of
Megawati and Gus Dur, when the rupiah was relatively stable and
inflation and SBI were going down," Widjaya said, referring to
former president Abdurrachman Wahid.

Heading toward the end of the year, Indonesia's economy has
indeed been put under a lot of pressure; with the rising trend in
inflation and interest rates holding back economic activities and
growth.

Heavy inflationary pressure mainly came after the government
hiked fuel prices in October for the second time this year.

The Central Statistics Agency (BPS) has reported on-year
inflation in September at 9.06 percent, leaving little option for
the central bank but to raise its key interest rate to a current
level of 11 percent, from 8.75 percent in July. Bank Indonesia
said the rising interest rate was necessary also to contain
pressure on the rupiah against the U.S. dollar.

Widjaya, however, singled out one indicator where the current
economics team has performed better that its previous peers --
economic growth.

The economy in the first year under Susilo grew at least by
5.5 percent, by far the fastest as compared to performance of
both Megawati and Abdurrachman.

Still, even with such a growth, it failed to fully absorb
about 2.2 million of the new job seekers entering the country's
job market this year, Widjaya said.

"Assuming that a 1 percent growth could absorb some 300,000
new job seekers, the current economic team has failed to find a
job for up to 600,000 people this year," he said, adding that the
figure should be added on to about 10 million people who are
already unemployed.

Commenting on the reason behind Susilo's performance, Widjaya
blamed external factors -- such as the tsunami and rising global
oil prices -- and the lack of coordinated efforts within the
economics team to improve the economy.

"While they had little choice but to except and deal with the
external factors, the economic team could have done much better
in dealing with the problems if they were better coordinated.

"It's not uncommon to hear one economics minister say one
thing and another say the opposite. That's not right. They have
to coordinate better to improve the economy," he said.