'Only change of govt' will solve the crisis
'Only change of govt' will solve the crisis
JAKARTA (JP): A complete change in government is the only way
to put the Indonesian economy on the road to recovery from its
worst crisis in three decades, economist Rizal Ramli said
yesterday.
The director of the Econit think tank argued that President
B.J. Habibie's government was thwarted by a lack of credibility
which undermined all its efforts to prevent the country from
sinking into a deeper crisis.
The market still did not have confidence in the current
government because it was considered merely a continuation of
former president Soeharto's New Order administration, he added.
Habibie was Soeharto's choice, and many members of the present
economic team were also legacies from Soeharto's final, short-
lived development cabinet.
"To restore market confidence, I support the idea of replacing
Mr. Habibie as soon as possible with a new leader with
credibility and trust from the people," Rizal told a convention
of the Indonesian Economists Association (ISEI).
Private investors will shun Indonesia until Habibie and his
government were replaced, he believed.
"As long as private capital remains negative, any
strengthening of the rupiah would be temporary because private
capital has been the engine of our economic growth."
Although he agreed that Habibie had been entitled to a chance
to prove himself in handling the crisis, he said his time was
already up.
"Okay, give Habibie a chance. But we don't need six months to
evaluate Habibie's performance. Two months are enough to see if
the man has the capability to restore (the economy) from the
crisis."
From Habibie's record during his three months in office, he
said it could be inferred that he was incapable of navigating the
country through the waves of the crisis.
He listed several failures including the fact that Habibie's
administration was unable to stop the rise in prices of basic
commodities, with the cost of rice, cooking oil and sugar
skyrocketing.
He said the government was erroneously pursuing populist
policies by generously distributing subsidies to various sectors,
measures which would ultimately backfire by resulting in higher
inflation.
The government's tight monetary policy also proved ineffective
in arresting the fall of the rupiah against the U.S. dollar. On
the other hand, high interest rates punished corporations in the
real sector.
He added that the government had offered no explicit policies
on how to boost exports in the crisis.
Most importantly, he said, the government was not serious in
uprooting corruption, collusion and nepotism because not one
major corruptor had been prosecuted.
Rizal said if the country followed Habibie's timetable, the
economy could sink further, and it would take about eight years
to recover to pre-crisis development levels.
Meanwhile, ISEI said in a statement that there was no
indication the economy would recover in the near future.
The country's economic crisis was worsened by political
infighting, rampant violations of the law and human rights and
the social gap between the rich and poor.
Terming it an "economic, political, legal, human rights and
social crisis", the group said it stemmed from a crisis of
confidence and leadership.
"This leadership crisis has made the direction and design of
policies blurred and confused people because good governance and
good corporate governance are not yet practiced optimally," ISEI
chairman Marzuki Usman said.
Marzuki, also minister of tourism, arts and culture, said the
direction of economic policies in the future should be focus on
the allocation of economic resources fairly and optimally.
Future economic policies should also support an efficient
market mechanism with fair competition, he said. (rid)