Official says RI needs people-oriented economy

Official says RI needs people-oriented economy

JAKARTA (JP): Indonesia must shift to a more people-oriented
economy from the current strictly capitalistic system to ensure
fair distribution of wealth for its people, a government staff
expert has advised.

The country's strong leaning toward pure capitalism had led to
the destruction of its own economy, Mubyarto from the
Coordinating Ministry for Economy, Finance and Industry said here
yesterday.

"What Indonesia needs is a radical shift of its capitalistic
economic system toward the Pancasila economic system," Mubyarto
told a seminar. He was referring to the country's ideology, which
guarantees fairness and equality of the citizens' welfares.

Mubyarto said the government had focused on the development of
large conglomerates to boost the country's economic growth, while
it neglected smaller businesses in more than 30 years of
development.

Pure capitalism promised large growth but disregarded equality
and fair distribution of wealth for the majority of people, he
said.

The system created a "time bomb, which after 30 years really
exploded and destroyed the national economy".

Mubyarto said the country should adopt instead a "moral
capitalism", giving power to the working class and farmers who
make up the majority of the population.

There must be limits and quotas on distribution of domestic
income and wealth without sacrificing freedom, human rights and
productivity, he said.

The government must create a more progressive taxation system,
he added.

It must also implement more populist programs such as those to
help increase the income of people in rural areas.

He expressed fears the country would merely introduce cosmetic
changes to the badly hit economy.

"We usually prefer to take a middle road which is compromising
and not radical in nature by using (the word) reforms," he said,
adding that reforms might be interpreted as mere regulatory and
legal changes instead of structural one.

If the government was really serious, it should now focus on
empowering small and medium enterprises as well as cooperatives
rather than giving more facilities to big businesses.

The managing director of the Center of Economic, Industry and
Trade Studies, Benny Pasaribu, said small enterprises and
cooperatives were currently burdened by a lack of liquidity and
high credit interest rates, a poor raw material supply, hampered
distribution system and difficulties in marketing their products.

Pasaribu said less than 0.2 percent of large companies
dominated 61 percent of the gross domestic product, but only
contributed 12 percent to the labor field, while about 38.9
million small enterprises and cooperatives contributed 88 percent
of labor but had just 39 percent of the GDP.

The government has a long list of plans to empower
cooperatives, small and medium enterprises, including a plan to
provide them with funds to rebuild the distribution network,
severely affected by recent rioting.

However, a director of major retail chain Hero Supermarket,
Anton Lukmanto, said the government's intention to hand over the
distribution to the small and medium entrepreneurs and
cooperatives could backfire on the businesses.

"Retail businesses are not an easy business to manage -- bad
management could break the business.

"Involving small businesses in the complete economic
activities will need a long time and more effort than just
providing them with opportunities," he added.

The chairman and founder of the Lippo Group, Mochtar Riady,
said the government needed to develop human resources through
education and training.

"The economic gap between the countries in the northern part
of the world and those in the southern part lies in the disparity
of the quality of human resources."

The seminar was organized by the Center of Studies and
Development of People's Economy of the Argo Ekonomika foundation.

Other speakers were the vice president of Bank Nusa, Yan
Arial, president of the Kodel Group Soegeng Sarjadi, the director
of Trisakti University's Graduate Studies Program, Thoby Mutis
and the president of Bank Duta, Muchtar Mandala. (das)