Several basic questions for Indonesian economists

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.