RI problem political in nature

RI problem political in nature

By Dian M. Noer

JAKARTA (JP): The world we live in is not perfect. Within this
context we must aspire to a society that is not a perfect utopia,
but one that is realistic and attainable: a society where each
member, regardless of race, ethnic origin and gender can lead a
rewarding life.

All must have political representation and education. No one
can be deprived of these things, but does this realistic
aspiration reflect contemporary Indonesian society, even prior to
the current crisis?

For over 25 years, microeconomic aspects of development have
given way to big conglomerates. Whole sectors in the economy are
controlled by powerful companies. These massive conglomerates
dominate upstream and downstream industries and fund their
activities through their own banks.

Although the government provided an environment which allowed
the private sector to grow and aid the development process, the
allocative efficiency typical of the private sector and pricing
policy reflecting the true costs of production have not resulted.
In fact, the opposite has occurred.

An imperfect market structure allows these corporate elites to
determine the overall market performance. Prices do not reflect
the cost of production because there is no interplay of market
forces.

What is evident in Indonesia is a dualistic economic system,
in which elements of liberal capitalism are combined with the
weak market forces more characteristic of a socialist economy.

Furthermore, although the private sector has in theory been
drawn into assisting in the development effort, one question that
remains unanswered is just which companies have in fact been
given the privilege to participate?

Unfortunately, a collusive intimacy between business and
politics has resulted in very restricted access to a rewarding
life in the present day economy of Indonesia.

The crux of our economic problem lies not in the monetary
sector but in the real sector. The monetary sector has only faced
difficulties for the last six months, but combined with our
fragile real sector, this has triggered a downward descent into
crisis.

Neither the International Monetary Fund (IMF) nor the World
Bank can be blamed for the crisis. IMF and World Bank involvement
in domestic economic policy making activities should not be
resented. Nor should the widely publicized photograph of
President Soeharto signing his agreement to the IMF terms under
the watchful eye of IMF managing director Michel Camdessus.

The controversy surrounding the signing ceremony is not
concerned with sovereignty but with respect. It is difficult for
a foreign institution to view a nation riddled with corruption
and unequal economic opportunities with respect.

To some extent, the fault lies with the New Order economic
architects of the early 1970s who, with open arms, readily
accepted advice on development offered by these foreign
institutions. The influential role of the United States in these
multilateral institutions cannot be ignored.

The government's readiness to embrace these institutions since
the beginning of the New Order makes wrong to now question the
concept of liberalization, unless in a ploy to deliberately
deflect attention from the very essence of the issue.

If we had held true to the ideals of opportunity for all held
by our nations founding fathers then we would not facing the
difficulties that we currently are.

Technocrats and ministers have succumbed to the advances of
powerful and wealthy members of the country's elite and this has
resulted in market imperfections.

Some ministers, even in the last cabinet, were at times guilty
of assisting the business interests of the corporate elite in
return for a piece of the action for their family and close
friends.

It is therefore by design, not by accident, that we have
reached the present situation, where the economy is controlled by
those who have close connections to the political elite. These
people: the very affluent, the owners of big business groups and
those who think they have God given power and wealth, have
exclusive control over money, voice and even political activism.

The result is that their goals become accepted as the public's
goals, their views on economic development are given serious
attention by the authorities, out of fear more than sound
argument, and more importantly, their views are given a very high
profile in the media.

To succeed in pressing for the reforms concerned intellectuals
and former government officials have said are necessary, the call
cannot be confined to one part of the population.

Ideally, a better society is one in which opinion is voiced
and influence exerted by impartial and evenly dispersed
groupings. In reality this may not be workable because it would
be very easy for certain groups to believe the government favored
their rivals and vice versa, but favoritism based on critical
judgment, not collusion and nepotism, can still legitimately
exist.

As we live in an imperfect world, a partially happy society is
a more desirable option than a society filled with unhappy people
living in a riot-prone environment.

This is a fundamental issue which requires a political
solution. Although the crisis in Indonesia is economic in nature,
the cure will not be found through economic policy alone.

For example, it is highly unlikely that a currency board, or
even the IMF-plus package which has been bandied around, could
guarantee a better Indonesian society in the long run.

Economic performance is a function of political management.
Good governance is therefore a sine qua non for the economy to
function effectively and fairly.

The topic of good economic practice requires a separate
discussion, but good governance requires leaders who are well-
educated, honest, impartial, who have integrity and who believe
in democratic principles.

On the other hand, good governance does not hinge on an
individuals ability to gain an advanced degree in aerospace
engineering, nor on possessing a military background. One of the
most important principles of democratic society is that civil
authority must not acquiesce to military power.

However, education is important. A leader who is well educated
has a better chance of leading a nation through more good times
than bad.

A leader should also have the integrity and the courage to
state clearly what is right and what is wrong, and to make
decisions based on sound arguments and ethical considerations.

In this country, those who have authority or influence will
speak out only when they no longer hold important government
posts, if they speak out at all.

Prof. Emil Salim's, who was my professor at the University of
Indonesia and a figure whom I respect, has voiced comments on the
current economic problems and has criticized the government for
not taking immediate corrective action. However he, and other
Berkeley-educated technocrats, could have done much more to
correct the deeply rooted economic problems during their terms as
ministers.

It is my firm belief that the only solution to the crisis in a
society such as ours is to reach out for a better society through
a political solution. Economic policy interventions have already
been tried, but to no avail.

The problem is neither monetary or economic, it is a problem
of trust, political trust.

The solution must therefore be political in its nature. A
comprehensive political solution for the benefit of all the
people and the economy of this country has not yet been
attempted. After a generation of the New Order government, it is
now the right time for a fundamental and peaceful change.

Under good governance sound economic practice will quickly
follow. In turn, this will create an environment conducive to
comprehensive human resource development, which will help to
cement a better society.

Political change is imperative. We must forget the proverb
which says that if there is a fish that stinks, the stinks come
from the head.

The writer is an observer of political economy and lives in
Jakarta