Rediscovering people
Indonesia is in for another robust year with economic growth of more than 7 percent, according to the predictions of both government and private-sector economists. Very rarely have economists of both camps been so unanimous about the economic outlook despite the political overtones of the national agenda in the run-up to the May 29 general election. The predictions are based on two basic assumptions that the present national leadership will be re-elected and the fundamentals of the economy will remain strong and healthy.
The assumptions go further to include that the leadership's re-election will guarantee the continuation of economic and bureaucratic reforms. Further down the line, this means consistent major economic policies based on an export-led strategy. Because this kind of macroeconomic management has proven its success in making economic fundamentals strong and sound, the outcome of the upcoming election is not expected to bring about any fundamental change to macroeconomic policy.
Consistency is a boon to private investment, which have since the mid-1980s become the engine of economic growth, because it means predictability -- the condition which distinguishes business from gambling. And capital investment thrives in an environment which allows reasonable calculation of risk.
But the upbeat predictions should not make us complacent, because they are qualified with worrying reservations. The higher incidence of riots in the last year means we should still be on guard despite the rosy economic outlook. Social and political stability is precarious and vulnerable to sudden brutal outbursts of discontent and restlessness, which are often simply set off by wild rumors. Another bout of mass violence, even though geographically limited, would not only reduce the nation's economic assets but also increase what foreign investors see as country risk. The higher the country risk, the higher will be the cost of foreign loans which we have to pay and the higher will be people's tendency to think short term. Needless to say, this is not conducive for resource-based investments which are mostly long term.
As we enter the New Year, we should critically reflect upon the reasons which could have so easily led mobs to rampage and commit other destructive acts. The government and the ruling Golkar, though certain of another majority win in the upcoming election, as they have always been in the past 25 years, should not be misled by the misperception that things are basically all right.
The latest wave of incidents should instead force the government to rediscover the people as the end of, and not the means to, development. Several cabinet ministers have often preached about the urgent need to empower the people but not much of this has been translated into development strategy or policy. What we have observed so far have been mostly ad hoc measures such as the extension of concessional or interest-free loans, preferential treatment and various other forms of political goodies which are unsustainable in the long run and do not significantly empower the people.
People-centered development means participation, people's involvement, social mobilization and the broadening of economic, social and political bases. Empowering people also means re-engineering the government for the villages and dismantling the monolithic stranglehold of the large and corrupt central bureaucracy. Such a development mode may not generate such high growth as the free market system. But the latest wave of incidents has disclosed the market system's failure to address inequality, injustice and inhumanity. We have also noticed how many areas have simply become playgrounds for investors and wealth extractors, who surely contribute to the generation of high growth but do so without great regard for degradation, deprivation, denudation or the eviction of people.