RI needs govt changes to renew confidence: Econit

RI needs govt changes to renew confidence: Econit

JAKARTA (JP): Indonesia needs a major change of leadership and
more democracy to restore its credibility and regain public
confidence, the Econit advisory group said yesterday.

Econit director Rizal Ramli said a new government would create
a new legitimacy and mandate and thus confidence and trust in the
country would return.

"All countries which have come out of economic crisis began to
recover after they changed their government," Rizal said, citing
Thailand, Mexico and Korea as examples.

The basis of the New Order government's legitimacy over 30
years was economic development, which justified the lack of
democracy and transparency, he said to reporters at Econit's
Public Policy Review.

But within the last nine months, with the economy crumbling
fast, many people began to realize the need to pursue democracy
and openness, he said, adding that without it, confidence would
likely not return.

"In a democratic country the burden of economic adjustment
during a crisis is carried proportionally by all layers of
society, but in a nondemocratic system like Indonesia, the lower
and middle class are the ones having to bear the most burden," he
said.

Rizal said confidence in the government had been severely
eroded because "the gap between what's being said and what's
being done is so wide."

The government also seemed to continue protecting the vested
interests of certain groups through cronyism and nepotistic
facilities, he said.

"Groups that were having parties before the crisis still
continued having parties, instead of sharing the bills and
cleaning the dishes," he added.

This was even more apparent in the formation of the Seventh
Development Cabinet established last month which he said was
"filled with nepotism and cronyism".

When many people were expecting a healthy cabinet free from
conflict of interest, the government appointed several people
with heavy business interests as policymakers, he said.

A conflict of interest was also apparent in the Indonesian
Bank Restructuring Agency (IBRA), an agency consisting of
representatives of private and government-sector banks set up by
the government to rehabilitate the banking sector.

Several IBRA members hold positions in or could be linked to
companies, which could prompt a conflict of interest, he said.

Rizal said Econit supported the many antigovernment protests
which have been held almost daily by university students and
professors across the country, saying this movement was just "the
tip of the iceberg".

These protesters were voicing the same demands throughout the
country, he said; a reduction of prices of basic goods, the
elimination of corruption and nepotism in the system and a new
state leader.

Econit's associate director, Laksamana Sukardi, said the
student protests indicated that Indonesia was in a process of
change, motored by the economic hardship.

"The only question is the speed of the process of change ...
this is indicated by unemployment, price increases and repression
levels," Laksamana said.

Econit also said yesterday solving the problem of private
foreign debt, which was estimated at about US$68 billion, was
also crucial for recovery.

It proposed a system to resolve the country's offshore private
debts, by dividing debtors and foreign creditors into prudent and
reckless categories.

The government must provide maximum assistance for the debtors
and foreign creditors which have sound prudent lending and loan
portfolios, Laksamana said.

The government, for instance, could guarantee convertible
bonds issued by a specially set up "Independent Holding Company"
of the good debtors to finance the debts, he said.

But the government must prosecute local companies which
managed their loan portfolios recklessly, he said.

Banks and creditors guilty of reckless lending to local
companies must bear the consequences of their risk and write off
the loans.

However, the government must help minimize their losses by
repossessing both the offshore and domestic assets of the
debtors, and by putting debtors who refused to honor their debts
on a blacklist, he said. (das)