Privatization priority

The case for allowing a faster rate of privatization in the Indonesian economy is a compelling one.

From the vantage point of fiscal solvency and macroeconomic efficiency, we see the calls from some politicians insisting on further delay in the sale of state assets as completely flabbergasting.

More confounding still, is the fact that the demands for a slower pace of this economic change came from members of the House of Representatives -- politicians who are supposed to be fighting for the interests of the people.

Are these politicos so harshly arrogant that they are still blind to the reality that millions of people in this country have been suffering from dire poverty since the 1997 economic crisis?

Perhaps worse yet, do they purposely ignore the millions of children deprived of even the most basic education and health services? Their future is, sadly and unfairly, a bleak one.

Intellectually, are the House members so ignorant of the blunt fact that, without a faster pace of privatization of state-owned enterprises (SOEs) -- and sales of assets held by the Indonesian Bank Restructuring Agency (IBRA) -- a lasting economic recovery will remain an elusive dream?

Aren't they aware that, due largely to past mistakes -- not to mention gross mismanagement and pervasive corruption -- the government is now almost bankrupt with total debts of more than US$135 billion -- and that the economy is severely strapped for liquidity?

It is entirely a paradox to observe that it is the House members and not the government, notorious for its deep-seated culture of corruption, that has staunchly opposed the privatization program. It should have been the other way around, given the bitter fact that SOEs have, so far, been used by senior officials as cash cows.

The findings of independent audits of a dozen SOEs last year showed how totally inefficient those state companies had been, the laxity of their internal control, their poor accounting standards and how arbitrary government investigations were of their day-to-day operations.

Needless to say, based on empirical experiences in most other countries, privatization will bring in additional revenues to the cash-starved government, enabling it to reduce debt and making more resources available for public welfare.

Privatization is also greatly effective in improving macroeconomic efficiency through the creation of more competitive market activity.

Its microeconomic benefits, likewise, are equally manifold, including more efficient -- and consequently, more profitable enterprises -- larger tax revenues for the state and a significant increase in investment to create more jobs.

Fears the privatization program would bring the national economy under foreign domination are overblown.

One should not forget that it was mostly the corruption- infested national companies that were responsible for the economic malaise.

This can be seen in the thousands of companies being treated in the IBRA "restructuring hospital." Foreign companies will always be subject to Indonesian laws and regulations. But they will help promote good governance practices in the private and public sectors.

Instead of demanding a special law to govern privatization, the House should instead require the government to formulate a broad legal and political framework.

This should be backed up by a credible strategy for SOE reform and privatization and stipulate clear-cut directives, standard operational procedures and step-by-step process for divestment to ensure highly accountable -- and transparent -- privatization transactions.

State Minister of State Enterprises Laksamana Sukardi was right in his warning last week that Indonesia cannot afford the delay in the privatization program because we are in the mid of a deep crisis: if the economy continues to bleed, more and more people will continue -- as they are now -- falling into absolute poverty.

The government needs the full support of the House in fighting the vested-interest groups and powerful lobbyists, including SOE managements, who often gang up with SOE employees in opposing the program.

But the government also needs to demonstrate political courage and a ability to act firmly, consistently and decisively to enforce its policies in order to earn such support.

The government's credibility was eroded by its seeming powerlessness in dealing with the employees of PT Semen Gresik and their strike to block the company's privatization, and with the workers of PT Telkom who demonstrated against its asset swap with another SOE, PT Indosat.

This is perhaps the first time in the nation's history that the employees of SOEs have been so blatant and daring to the point of breaking laws in an attempt to dictate their wishes on the government.

This is not a democratic practice of expressing views, but is simply an anarchy that could have taken place only under a government suffering from a crisis in leadership.