Regional economy, and people, must be prioritized

Regional economy, and people, must be prioritized

By Sjahrir, analyst and Chairman of the New Indonesia Alliance Party( Partai Perhimpunan Indonesia Baru)

Whoever wins the 2004 general elections will not be able to govern properly if they do not attend to the economic problems of the regions, and at the same time can overcome these issues. The 2004 general elections will produce a president holding a high degree of credibility and legitimacy. In the country's history, never before has there been a directly elected president able to claim that at least 68 million Indonesians voted for him. The new president will need this mantle of legitimacy to tackle the country's economic problems, which are in fact the regional economic problems. There has been much talk about the regional autonomy law as well as its implementation in the past two years. Attention has also been directed toward misuse of regional budgets both at the provincial and regency levels, but it seems that few have made efforts to find out the actual amount of damage that misuse or budget errors cause to the people. Granted, we cannot disregard the problems caused by the Indonesian Bank Restructuring Agency (IBRA), the implementation of the Bank Indonesia liquidity support loans that is laden with embezzlement as well as all the basic problems arising from both of the above in the state budget, especially the huge interest payments for government bonds. Neither do I overlook the dilemma of enormous foreign loans, especially when related to the fact that in 2004 we will not ask for assistance from the International Monetary Fund (IMF) to reduce budget deficits or payment of foreign loans. Yet all of these concerns are meaningless if we do not attend to the possibility of disintegration and economic failure that are caused by our own failure in executing regional autonomy. This does not include the ethnic, tribal or religious conflicts that are not connected to regional autonomy. It would be totally unrealistic to discuss the Indonesian economy without taking into account the economic condition of places such as Bali, Southeastern Sulawesi, Labuhan Batu Medan regency and East Kutai regency in East Kalimantan. The national economy is not merely about listing the economic condition of the regions, and the provincial economy is also not the result of a rote totaling of the economy of the regencies and city administrations in a particular province. Indeed, the science of regional economy has taught us how to make accurate calculations relation to the country's economy as a whole. This is not about a scientific discussion on the relationship between regional and national economy, but examining certain dynamics with implications that are not well understood by most of us. We often make statements on the importance of developing our human resources. The human resources development data is generally limited to the national statistics data on the level of education and type of occupation of our citizens. No less important is the understanding of human resources in relation to some very basic aspects, such as the education and health status of each individual citizen in a nation. In this connection, the services provided by the United Nations and the National Development Planning Board in recording the Human Development Index are highly commendable. However, how to use all this data in the right context to decide the correct economy for a nation has not been considered by most of those in the government. It is precisely in this context that a study about regional autonomy, especially Law No. 25 on regional finances, is central, with some prominent areas to be taken care of. There is no direction from the central government on the priorities of using the provincial as well as the regional/city budgets. Though the available funds are not too small, very often no allocations are made for elementary schools or public health clinics. Meanwhile, due to reasons of limited funds, allocations for both elementary schools and public health clinics are also very small in various cities and regions. Although fund limitations can be understood in provinces like West and East Nusa Tenggara, there is an inexplicable setting of priorities, with increases in salaries for legislative councilors still taking place and allowances for governors and regional executives continuing without review. Here is the glaring misallocation of regional budgets, which has nothing to do with the national budget that is handicapped by the huge payments of interest on government bonds. The regional budget that does not carry the burden of paying foreign loans is enjoying these foreign loans in the form of various projects in the regions. It must be acknowledged that there have been great efforts in the regions to increase the general fund allocation and the regional original income, as well as various special funds allocation. On the other hand, there is no fiscal discipline in using the budget. We can clearly detect why there is a great movement to expand the regions, because by such expansions there will be more provinces -- meaning more governors and a greater number of local legislative councilors, and more regencies and cities - which translates into more regents, mayors and councilors at the level of regional and city legislative assemblies. If we let this happen, there will be the loss of trillions of rupiah for salaries, allowances and all sorts of routine expenses for the new bureaucrats of legislation and executive at the local levels. What will be left for the people? There are media reports lamenting decrepit elementary school buildings in the provinces. What is more terrifying than the physical condition of the schools is the output in the form of elementary school graduates with minimal capacity, both knowledge and skill-wise. Abundant reports are available on the thousands of public health clinics that have no antibiotics, and public hospitals lacking the most basic facilities, attesting to the terrible condition of healthcare in the country. It is different from the country's situation in the 1980s and the 1990s, when even as income from oil exports and foreign loans were embezzled, new elementary schools were built and public health clinics were able to secure sufficient supplies of medicines from state-owned companies like PT Indofarma that produced a number of essential medicines. It seems clear that we are preparing to embark on the destruction process of our nation if there are no meaningful changes in the way we view the regions, which require budgets with clear-cut priorities to fulfill the basic requirements of the people. Of course, that does not mean a disregard for the very real problems in the regions, such as the investment climate and institutional problems connected to the legislative and executive bodies, all of which need changes and much hard work. Ultimately, the success of the future president of Indonesia will be based on the ability to cope in overcoming the most basic problems faced by the regions and improving the welfare of the people. 1