Wed, 24 May 2000

Monday's economic meeting

We somewhat worriedly expected a worsening economic management after President Abdurrahman Wahid decided last month to personally chair a weekly economic monitoring meeting on Mondays. After all, he has, so far, been known for a lack of interest in complex economic issues and managerial discipline. Moreover, he often meets individually with economic ministers to discuss matters that are supposed to be the purview of the coordinating minister of economy, finance and industry, Kwik Kian Gie.

However, our concerns seem to have been unfounded. The issues discussed and resolved in the third weekly meeting, as explained in a media release issued on Tuesday morning, gave some assurance that the forum could contribute greatly to the improvement of coordination between economics ministers.

The latest weekly meeting, for example, assessed latest developments in corporate foreign debt and bank restructuring programs, issues related to the investment climate, the latest preparations for decentralization and disputes between local people and mining contractors, and reviewed the implementation of reform measures included in the new letter of intent to the International Monetary Fund (IMF).

The format of the discussion and the subsequent instructions given by the President to the economics ministers at the meeting provide a very positive signal that the government has the right sense of priority with regard to resolving the woes that are dogging the economy.

As the weekly monitoring meetings continue they will hopefully develop into a very effective institutional framework to help translate political resolve into bureaucratic resolve in economic matters. Such a regular gathering can be very efficient because it brings all the economic ministers face-to-face with the President, and decisions can be debated vigorously before the President gives his final fiat.

The meetings will keep all economic ministers on their toes because they will have to be ready with answers to the President's questions. Any problems of inter-ministerial coordination or cooperation can be resolved by executive fiat on the spot. For example, the industry and trade minister can directly raise any problems with shipping or port services that hinder exports and then the President can immediately check them with the minister of transportation and then decide on the best solution.

The weekly meeting would be more effective if it was also attended by representatives from industrial associations as these businesspeople could candidly raise problems they were encountering in the field. Again, the President could immediately refer these problems to the ministers concerned.

However, to ensure the meeting is both efficient and effective, it should be maintained as a select gathering of ministers and top bureaucrats. The representatives of industrial or trade associations invited to the meeting should be selected according to the urgency of the problems or agenda to be discussed.

The Cabinet failed in the first test of its performance last month when it fell behind schedule in implementing many of the reform measures stipulated in the Jan. 20 letter of intent, prompting the IMF to postpone the second disbursement of its loan from April to June.

The weekly meeting should therefore be maintained, at least until the economic ministers develop into a solid working team. However the government sees its economic-policy making mechanism right now, what it is actually doing is none other than economic- crisis management as most companies, buried under mountains of debts, remain under the emergency unit of the Indonesian Bank Restructuring Agency and most banks are still too weak to inject lifeblood into the economy. And a critical situation requires fast and firm decisions and an effective monitoring system to provide an early-warning mechanism before problems get worse.