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)