Recovery committee proposes crisis center

Dadan Wijaksana, The Jakarta Post, Jakarta

The National Economic Recovery Committee (KPEN) proposed on Thursday to the government to set up a special agency that could help bridge differences between the business sector and the government.

KPEN chairman Sofyan Wanandi said that the agency, preferably called the "crisis center," would help settle emerging problems that could slow down progress in the country's economic recovery.

Speaking in a press conference, he said that aside from leadership, the government lacked coordination in dealing with the current economic woes.

"Policy makers do not seem to have a sense of crisis. We can see that ministers and legislators are all moving in their own direction. They show no sense of urgency at all," Sofyan said.

He also criticized Bank Indonesia with its high interest rate policy which works against the interests of the business sector.

Bank Indonesia has been keeping interest rates high to ease pressure on the rupiah and stall inflation. As a result bank loans are expensive thus discouraging companies from making investments that would otherwise create new jobs.

Regarding next year's outlook, KPEN said that there were at least four prerequisites the country must provide in order to bring back foreign investment: providing legal certainty, security, better settlement of labor disputes and sorting out the confusion over regional autonomy.

Without the flow of foreign investment, a turnaround in Indonesia's economy will be difficult.

The committee also said that the government in 2002 must focus on efforts to boost the domestic economy to generate more jobs.

"Next year, exports will decline due to unfavorable external conditions. It is necessary, therefore, for the government to shift its focus to local industry," Sofyan said.

Protection for domestic industry is needed to prevent local companies from going bankrupt. "We can then help avoid massive lay-offs."

Recent data shows that Indonesia's unemployment rate has reached 40 million.

With Indonesia's workforce growing by between 2 percent and 2.5 percent per year, experts predict the economy needs to grow by 7 percent to generate more jobs.

Last year, the economy grew by 4.8 percent while this year it grew by 3.5 percent.