RI needs pro-reform cabinet to improve economy

The rupiah remains weak and prices are skyrocketing, triggering riots in several towns. Economist Emil Salim, who held portfolios in three previous cabinets, discusses the necessity for Indonesia to have a credible pro-reform cabinet to improve the nation's economic and political condition.

Question: The government has introduced overall economic reforms but why does the rupiah remain weak and why do prices continue rising?

Emil: The rupiah remains weak because the implementation of the reform measures, which are actually very good, has not been smooth and consistent.

I see that some cabinet members in the last few weeks of their tenure have halfheartedly implemented the reform measures. Local administrations are also reluctant to abolish local fees as required by the reform measures.

The government lost some of its credibility when it backtracked on the previous reform package (November), for example, by reviving the projects previously shelved or postponed and then stopping again the same projects a few months later.

This indicates a strong battle between pro-reform officials and those wanting to maintain status quo.

Meanwhile, supplies of essential commodities become scarce and prices are skyrocketing because many traders and distributors, feeling uncertain about the wild volatility of the rupiah, temporarily halted their trading activities to wait for prices to stabilize while some others speculatively raised prices to match the changes in the rupiah exchange rate.

Q: You don't see any sabotage efforts?

E: There are a few cases of sabotage but in general, traders are piling up goods because of the high degree of uncertainty.

Q: How do you see the recent rioting in several towns?

E: Social conditions are always vulnerable when there are massive labor layoffs, while prices are rising steeply. Some riots might have been ignited by certain parties for political goals but most of them have been spontaneous due to frustration with the difficult economic conditions.

Q: Do you see any attempt to divert the blame from the government to the ethnic Chinese?

E: I am not happy with that. Such a move, if any, is an irresponsible and futile move and that is cheap politics. Any party should not use racial, religious or ethnic sentiments as an agenda for political movements.

Q: Since the introduction of economic reform measures has not effectively restored confidence in the rupiah, do you think it necessary for the country to introduce political reform?

E: We do need political reform but we must be patient. We can start the political reform by seriously implementing the economic reform, which will eradicate the crony capitalism.

The 50-point economic reform signed in January by President Soeharto and the managing director of the International Monetary Fund, Michel Camdessus, will abolish monopolies, restrictions on trade, nepotism in business and cartel-like organizations, which have produced the current political power.

So, implementation of the economic reform would create a conducive climate for changing the pattern of political power and developing potential to create new political concepts.

From there, we will start the next step of political reform by, for example, introducing a new method of recruiting members of the House of Representatives through district-based general elections. The new House members will then introduce new laws to facilitate the democratization of the political system.

We cannot expect the introduction of pro-democracy laws from the current House members, who have been recruited under the old system.

Q: Why don't we start the political reform by establishing a cabinet whose members are committed to reform?

E: We can do so if we can appoint pro-reform people in the next cabinet, who will then initiate the introduction of political reform. But the slow implementation of the economic reform indicates that the power of the antireform club is very strong. A few cabinet members are really in favor of reform but I wonder whether they have groomed their cadres.

Q: Now that all the factions in the People's Consultative Assembly (MPR) are apparently determined to reelect the incumbent President Soeharto as the country's next president for his seventh term, do you think the next vice president can play a role in promoting political reform?

E: It depends on who will take that position. A vice president, who gets his position from the MPR, will have a power to do so. But I doubt the capability of the vice presidential candidates already put on the table. I think Pak Harto read the reactions of the people when the preferences were announced.

Q: You said recently that you would be ready if the MPR nominated you as a vice presidential candidate. What will you do if you are elected vice president?

E: I will push for the implementation of the economic reform to eradicate crony capitalism. I will continue motivating ministers to carry out the reform and supervise closely its implementation until a clean and credible government is established. I will also see to it that the cabinet is clean from corruption and collusion.

Even if I am not elected vice president, I will continue my fight for firm implementation of the reform through my teachings, discussions, writing and non-governmental organization activities.

Q: Do you think that President Soeharto will be able to carry out Indonesia's leadership in the next five years?

E: We have no other alternatives. The facts show that the factions in the MPR find it difficult to look even for vice presidential candidates.

Q: Do you think the economy will improve after the election of the next president and vice president in March?

E: It will depend on who will become the vice president and the economic team in the cabinet. The market will react positively if the cabinet comprises competent and credible personalities who are not corrupt. (riz)