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.