People should join hands as government in crumbling

People are encouraged to maintain solidarity as the prolonged crisis bites deeper, particularly as the government has been slow in addressing the crisis. Solidarity will help Indonesia stay united and hence repress any separatist inclinations, says economist Hadi Soesastro of the Centre for Strategic and International Studies (CSIS). He talked to The Jakarta Post's contributor I. Christianto recently. Here are excerpts from the interview.

Question: What are the biggest challenges the country is facing?

Answer: I'll define two kinds of challenges: Internal and international.

Internally, as a nation, Indonesia is losing its identity. It's been taken for granted for too long. We are existing without an identity. In the past, we had an identity as a young nation gaining independence through struggle. We kept this identity from when we proclaimed independence until the 1980s.

The New Order regime put too much emphasis on material wealth. The result was impoverishing ourselves as a nation as we were losing our identity. It's no myth that we struggled for independence.

Also internally, there is a process of disintegration. The idea and concept of decentralization and autonomy is like a quick fix for the problem of disintegration.

Internationally, since there's no identity or new identity, Indonesia does not have a precise attitude in the face of globalization. Some people are afraid of it, some are antiglobalization, and others don't give a damn about it, while others think globalization is a perfect opportunity.

Q: Internally, is disintegration a challenge or threat to the nation?

A: Both, depending on how you look at it. It should have been a challenge as decentralization is an integral part of democratization.

But we have to be careful in implementing this concept. I do not see a basic philosophy for this (the implementation of decentralization). It is not only about technical matters. Then there is the threat that the nation will become polarized from decentralization and regional autonomy.

There is already concern that once the regions get full autonomy, some will expel nonindigenous people. I know there are several regions agreeing to do this.

It will be even more dangerous as there is no definition of who is indigenous and how to identify certain groups who have lived in other areas outside their place of origin for a long period. We have to consider that everyone is Indonesian, don't we? But how can we have a state if we have such a narrow-minded philosophy? So are we really in a crisis of identity, which is reflected from the incapability to respond to internal and external challenges.

Q: What should we do in facing these challenges?

A: This is not about a priority to respond to either challenge. The nation has to have good organization to be able to respond to internal and external challenges. When the government fails to respond, the challenges will become threats. Just imagine if a region expels people who are regarded as nonindigenous based on their race, Indonesia will become a Yugoslavia.

Q: Then how can we maintain the spirit of integrity, especially when the government fully implements regional autonomy which will give provincial administrations more authority in managing local resources?

A: It's a matter of state mentality. We need to have strong leadership. Leaders, including the government, House of Representatives and People's Consultative Assembly must be able to set the ideas of the integrity of the nation.

Q: To some extent we're moving toward an open society. Isn't this a good condition to be in?

A: It is. Indonesian society is moving toward becoming an open society; however, we are moving without a clear direction. Say that the door is opened, but when we leave, everyone is confused about what direction to take and there is no clear rule on how to prepare for that direction.

Q: What do you think about the nation's general condition next year?

A: More or less, it will be about the same in all aspects. I think it's good news if next year will be more or less the same, because there's serious danger if it worsens.

Q: What kind of danger?

A: I think law and order will decay. Some people may think this is already happening now. But it'll be more serious next year. At worst, unrest will erupt everywhere.

Q: What will it be like, in particular the economic situation?

A: It's a mixed picture. We know, at least at this point, that there are a few parts of the nation's economy that are growing dynamically.

I can say the economy consists of two parts: the sick and the healthy. The latter, I project, will have grown by almost 7 percent by the end of this year. The sick part will have grown by only 2 percent or 2.5 percent.

Q: How do you categorize the sick and healthy parts?

A: The sick economy includes those under the Indonesian Bank Restructuring Agency (IBRA) plus some state-owned enterprises, like electricity company PT PLN and oil company Pertamina.

IBRA is like a hospital treating the sick firms. But the hospital chief is always changing, the physicians keep quarreling among themselves and the nurses do not care. This situation is hindering the sick from recovering.

It's a picture of the sick economy. All the government's energy is being directed at the sick economy, but I don't think it will be over soon.

To some extent it's good because the government does not have any time to interfere with the healthy economy. I would be very concerned if the government begins to create a lot of problems in the healthy economy. When they try to do something, they do it wrongly.

Q: What does the healthy economy include?

A: The healthy economy includes export-oriented companies which are not affected by debts. They are, among others, the Korean or Japanese electronics firms. The rest include medium-sized companies which are doing well. There are also small-scale companies. Some people call them the "underground" economy or "gray" economy. We used to call them the informal economy, but it's actually much more than just informal as this sector has been growing in retail, trade and so on.

By now the companies are not annoyed with the government for not receiving significant facilities while the banking (financial sector) seldom lends funds.

These companies, however, have been growing. It seems that we're turning into a traditional economy; a producing economy which does not rely on financial service sectors. There could have been lending without seeing a bank, but it has been based on trust and a cash-based economy. Usually this is very inefficient, but it is happening.

Q: Will the healthy economy survive?

A: The government may disturb the healthy economy through tax administration. But that would be hard.

There will likely be an impact on the sick economy. So far, the sick economy is the main source of tax for the government. Meanwhile, the healthy economy, which is originally not the main object of taxation, has been growing. Consequently, although the country's economic growth will be able to grow by 5 percent, the government will probably fail to collect enough taxes as anticipated.

The government may also kill the healthy economy if it fails to reform the economy.

Meanwhile, labor regulations may also affect the healthy economy.

Q: How will the economic situation affect the everyday person?

A: Certain people still have ideas and visions. When the economy allows the common man to have meals, the nation will be all right.

But unemployment figures will surge when economic growth remains at 4 percent or 5 percent. The problem is, educated people in urban areas dominate the unemployment profile in Indonesia. They can be a source of instability when the economic situation gets worse.

Q: Generally, what can we do in such a condition?

A: We can't depend on the current government, but it is going to be there for sometime although there will always be attempts to topple it.

We have to try to organize ourselves since we have a very messy government. That's why, I think, society must play a greater role. It must become the anchor of the nation, which is losing many things, including direction.

Q: What factors make the current government able to remain in power?

A: Attempts to topple the government must still be taken constitutionally. If it's not, the next government will also be toppled and so on. But doing it constitutionally will be very difficult, as a number (of mistakes) is necessary (to make it really happen).

I think even though there are attempts to topple the President, Vice President Megawati and House Speaker Akbar Tandjung and Assembly Speaker Amien Rais would not support them. Because they are reluctant to take over power in during such a difficult time. Also, I don't think it would be easy to do.

The people, as good citizens, still need to be whistle-blowers who observe the government.

Q: Are you personally optimistic about the nation's future?

A: I have to always be optimistic. My optimism is based on public trust. I believe the public tries to strengthen civil society. I have almost given up on the government, but that does not mean I will give up on the country.

I don't see any incentive for the government to make corrections. The elite always mentions the crisis in their speeches, but they don't really know about the crisis or feel its effects. There is no sense of urgency at all. Nobody in the bureaucracy makes decisions because everyone wants to retain their position.

Q: How can the common man maintain optimism?

A: If I criticize the government for not having any sense of urgency toward the prolonged crisis, the common people have to make up for it.

We have to show solidarity.

But I don't see any solidarity yet. Just as an example, I've seen there's a new showroom of luxury cars in Jakarta (Jaguar has just opened a showroom in Slipi, West Jakarta). What is this for? People will give up among themselves. No one will be able to live in peace when certain people show off such an extravagant way of life.

I don't understand why the government allows luxury car sales in Indonesia by using the World Trade Organization (WTO) as an excuse. Nobody is pressuring Indonesia to open its market to luxury cars in the country. There's no urgency to do this.

There are a lot of rules in the WTO for doing these things. We could have mentioned them for social reasons. There's the security factor, and there will be national instability because of a serious social gap.

So we can impose high duty on luxury cars. It's legitimate, as Indonesia does not have any luxury carmakers.