Rini's crisis center

Rini's crisis center

Industry and trade minister Rini Soewandi's move to set up a
crisis center in cooperation with business associations should be
welcomed and supported as a fresh initiative to help reinvigorate
the business sector through a mechanism that will focus on good
coordination, fast decision-making and concrete programs of
action.

As the minister in charge of manufacturing and trade that
makes up core economic activities, Rini is greatly concerned over
the worsening condition for investment and the steadily eroded
competitiveness of Indonesia's export industry.

She is fully aware that without new investment the country's
manufacturing industry will become increasingly less competitive
because its obsolete plant equipment will make it grossly
inefficient, unable to produce goods of higher value-added, and
will render its products unable to meet changes in market
preferences.

The almost 7 percent decrease in export revenues in the first
six months of this year and the recent reports about how an
increasing number of footwear and textile factories have lost
foreign orders to competitors in other developing countries and
how several major investors canceled their business plans in the
country are greatly worrisome indeed.

There must be many things fundamentally wrong when Indonesia
is losing in price competitiveness to such countries as China,
Vietnam, Malaysia and India while the rupiah's foreign exchange
rate remains almost four times less than it was before the 1997
crisis and its labor wages are still one of the lowest in the
world.

All these worrisome developments seemed to have prompted Rini,
who is known as a minister of fast, concrete action, to establish
a sort of nerve center where her officials and businesspeople can
frankly discuss and resolve any problems encountered in the
manufacturing and trade sectors.

Skeptics might doubt the effectiveness of the crisis center,
arguing that most of the obstacles to manufacturing plants and
trade activities lie beyond Rini's authority.

True, most of the major problems that affect industry and
trade such as inefficient and corrupt customs, port handling,
poor transportation infrastructure, lack of credit financing,
radical trade unions and uncertainty about tax assessment are
outside Rini's authority to resolve.

Ideally, though, to be fully effective, such a crisis center
should be headed directly by President Megawati Soekarnoputri
herself or at least by the coordinating minister for the economy,
given the good coordination and cooperation on the part of other
ministers needed to resolve the various problems faced in
manufacturing and trade activities.

The country, which is in its fifth consecutive year of an
economic crisis, actually needed such a crisis-management center
more than four years ago, but the President's top priority seemed
to lie somewhere else.

Such a war-room like an operation center is needed to bring
the political leadership face-to-face with representatives of the
business community and bureaucratic agencies at least once a
month to discuss and resolve problems of most urgency.

Any issues related to economic-crisis management such as asset
sales, debt restructuring, privatization, credit financing, port
clearance for imports, antibusiness rulings issued by local
administrations, smuggling and other crucial reform measures
could be settled quickly at the highest level of the executive
branch.

The basic rationale of such a mechanism is that the management
of an economic crisis should run like the emergency center of a
hospital, where fast decisions and concrete programs of action
are more important than bureaucratic procedures or rigidities.

Despite its inherent weaknesses and limitations, Rini's crisis
center will nevertheless be able to at least keep her apprised of
the problems in various areas encountered by businesspeople and
will therefore enable her to bring up those issues to the Cabinet
where resolutions can be decided at the highest level.

However, it would be better and more effective in helping
resolve economic problems if the President or the Cabinet
eventually makes a magnanimous decision to upgrade and broaden
Rini's crisis center into an interministerial crisis center that
works with the highest sense of urgency to resolve problems by
executive fiat on the spot at least on a monthly basis.