RI should restructure state firms: Economist

RI should restructure state firms: Economist

JAKARTA (JP): Economist Christianto Wibisono suggested yesterday that Indonesia need to restructure, rationalize and revitalize state firms and government bureaucracy to improve the country's competitiveness.

He said that restructuring state firms should be orientated towards markets and efficiency, not the vested interests of few people.

"The regrouping and merging of state plantation firms, for instance, are still on the status quo and vested interest of a few people," Christianto said, referring to the government's regrouping of 26 state plantation firms into 14 entities earlier this year.

He said state firms have lost some of their market shares in a number of sectors, including electricity, transportation infrastructure and telecommunications, after the sectors were opened up to private participation.

Local conglomerates have also been more aggressive than state firms in tapping the markets. Conglomerates are also one step ahead in terms of management by recruiting Western-educated professionals.

"In this case, if state firms are managed in a feudal manner and based on nepotism, they will be left further behind by conglomerates," Christianto said when announcing the convening of 1996 Business Summit in Grand Hyatt Hotel on May 29.

Bureaucracy

Christianto also suggested that the government revitalize the bureaucracy, which he said causes inefficiency in the country's economy.

"All businesses in the country are related to bureaucracy. If the bureaucracy is inefficient, it will eventually affect private business efficiency," he noted.

He added that the inefficiency in the bureaucracy has been very much caused by the low salaries of civil servants, whose average income is far below the country's per capita income of US$1,000.

He suggested that the government restructure the civil service and transfer 50 percent of its personnel to productive sectors. With such a move, the government could increase civil servant's salaries by 50 percent.

"If we don't make a breakthrough for our bureaucracy, our economy will continue to suffer from inefficiency in all sectors, as a result of inefficiency in bureaucracy," Christianto said. "We need to restructure and revitalize our bureaucracy to improve our competitiveness."

According to a survey by World Economic Forum and Geneva-based International Institution for Management Development last year, Indonesia's overall competitiveness ranked 33 among 48 surveyed countries, just below Peru, Portugal and Italy but better than China, Philippines and Columbia.

Meanwhile, Indonesia's other neighboring countries had better rankings. Thailand stood at rank 26, Malaysia 21 and Singapore second.

The survey, which involved 2,500 chief executives from the 48 countries, covers eight parameters in the analysis. They include domestic economic strength, internationalization, government, finance, infrastructure, management, science and technology and the people.

Among the eight parameters, Indonesia's finance is considered relatively competitive, ranking 26, followed by domestic economic strength at 27, government at 31, internationalization 32, infrastructure at 36, management at 38, science and technology at 43 and the people at 44.

Meanwhile, according to Economic Freedom of the World 1975- 1995 by the London-based Institute of Economic Affairs and Vancouver-based Fraser Institute, Indonesia is ranked 31st, better than France, Denmark, Mexico, Spain and Austria. (rid)