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