Several basic questions for Indonesian economists

Dita Indah Sari, Jakarta

The debate over the pros and cons of the fuel price increase has begun to become dreary. Even though in many regions voices of opposition can still be heard, the peak of the debate has already passed.

Unlike previous plans to increase the price of fuel, this time the polemic between economists in the mass media was both extensive and open. The opinion pages of many newspapers were filled with articles criticizing each respective position. This is a positive development, not just for the academic community but also for the general public, because the people were exposed to and able to consider alternative thinking.

However, separate from this, the debate that emerged in the mass media and at seminars failed to touch upon a fundamental solution for our economy. It is true that the neo-liberal economic policies of the government have been subject to open criticism by many economists. The criticism of the continued dependency upon the International Monetary Fund (IMF), for example, pressured the government to formally end its cooperation with the IMF at the end of 2003.

There has also been no shortage of critics of other policies that are neo-liberal in orientation, such as the reduction of import tariffs, the removal of minimum taxes, privatization, the basic cost of unhulled paddy, the reduction of fertilizer subsidies, etc. However, once again, the solutions being offered are partial and do not yet constitute an alternative packet that is both structurally and operationally different from what has been carried out up until now.

One fundamental question that is often put forward is how to transform agrarian production in this country into a modern agriculture industry. Changing the mode of traditional agriculture with its low productivity will only be possible if it is accompanied by growth in basic industry, which must be capable of producing engines, fertilizer and seeds that can be accessed by farmers at the lowest possible cost.

The restructuring of national industry needs to be prioritized in order to fulfill the needs of the rural sector, because it is this sector that has the highest rates of unemployment.

Our economists have yet to put forward a clear plan of action in relation to this. There was fierce protest over the removal of fertilizer subsidies. However, the concept of national industrialization focused on the rural sector has not yet become a strong enough platform from which to challenge government policy (and that of their economists), which prefers to surrender the future of Indonesian farmers to the "wisdom" of the market.

There has not been a concrete proposal as to how to maximize existing resources and potential in order to develop basic industry.

The abandonment of two fertilizer factories in Aceh is a clear example of how the development of national industry has not been a priority for the government of Susilo Bambang Yudhoyono and Jusuf Kalla. What are the solutions being offered by economists to resolve these problems?

There also has not yet been a debate regarding how to overcome the problem of dependency upon imports, which constitutes the main structural problem of our nation's economy. Even though this dependence has long been known as the cause of the high cost of production, there has yet to emerge a clear alternative that clearly articulates the steps that must be prioritized in order to overcome this dependence.

Successfully developing basic industry is the first step toward reducing our dependence upon imports. Material and technological capital that we can produce ourselves is not only capable of reducing production costs to the point that they are competitive, but in the longer term can also create a stronger and more stable economic structure. Moreover, Indonesia is such a rich country, filled with natural resources. Why have economists not objected to this export orientation on raw goods? Particularly considering that raw good exports are followed by the import of consumer goods from overseas countries, which, ironically, get their raw materials from Indonesia.

Is it necessary to limit the export of raw goods and agricultural produce, so that these goods can be used to revive national industry? Is it necessary to limit natural gas exports to Japan and South Korea in order not to disturb the national fertilizer industry? If human capital is crucial for economic productivity, is it necessary to prohibit completely the privatization of the pharmaceutical industry, health care and education?

Why is the State Logistics Agency (Bulog) only concerned about distributing and stabilizing the price of rice? What about the other agricultural and manufacturing products? Who is responsible for protecting their markets and prices? Should labor flexibility and the work contract system be maintained when there is no social safety net for those who are fired or made redundant?

There are many questions that have yet to be answered by our economists. Alternative ideas that oppose mainstream economics, however, do not receive attention in the mass media. This is the reality. However small the space for discourse may now be, it is time to clearly differentiate between the different concepts and types of economic thinking.

The battle between economists is the consequence of a constantly changing political situation, which forces people to make a choice. The people, in making a choice in accordance with their own interests, need something to guide them. Without alternative ideas, conveyed in their entirety, the people will have a difficult time imagining what this "better Indonesia" will look like.

The writer is chairwoman of the Democratic People's Party (PRD). She can be reached at ditadanburuh@yahoo.com.