'Social distress' the next crisis to threaten Indonesia
'Social distress' the next crisis to threaten Indonesia
JAKARTA (JP): The government must quickly address the social
impacts of its economic reforms to prevent the country from
sliding into a more severe situation, economists say.
"The great challenge Indonesia is facing in this economic
crisis is the spillover effect into society," said senior
economist Frans Seda.
The former finance minister explained that Indonesia was
entering a new crisis which, if not properly and timely handled,
would be far more severe than the current economic crisis.
Although all fiscal and monetary targets have been met and the
rupiah is fairly stable, social hardships must still be
addressed, he said, pointing out that the situation could only
improve with the return of economic growth and employment.
"The government should be more accurate and swift in dealing
with hunger, epidemics and poverty, which could trigger a
dangerous social crisis," he said.
He explained that people needed hope to endure their current
and future hardships. Such hope must come from the confidence
that the government would be able to solve the crisis, he said.
The government has recently implemented several economic
measures, part of wide-ranging IMF-sponsored reform programs,
including the raising of fuel, electricity and public
transportation prices.
Coupled with the fallen value of the rupiah and skyrocketing
inflation, the new measures have been a big blow to many people,
especially those who have been laid off following massive
reductions in many business operations.
Economist Sri Mulyani said that to prevent social apprehension
over the unpopular economic policies, the government must
establish public confidence.
"Unpopular policies can only be delivered by a popular
government that is supported by the public," she said.
Current hardships, she said, would only escalate during the
next six months.
She explained that public support could only be achieved if
the government showed that it was serious in reforming the
country's political system.
The bureaucracy must also be reformed to insulate it from the
business sector, she added.
"This would show that the government's policies are
representing the interest of the people, not the interest of
certain business groups," she said.
Frans agreed that economic reform was not sufficient in and of
itself to regain public confidence and credibility.
He stressed that the government and the military should not
take repressive action against student demonstrators because it
would only trigger radicalism and international doubts over
Indonesia.
"The aim of political reform is to bring about good
governance," he said.
Senior economist M. Sadli said that a by-product of
implementing the IMF-sponsored economic reforms would be
administrative and political reform.
"The IMF package is promoting more transparency and fairness
in handling tenders and contracts," he said, adding that this
would open the door to political change.
He, however, doubted whether drastic political change, as
demanded by students and intellectuals, was the best way to
establish a more popular and stronger government.
He explained that although it was clear that the current
government did not have the support of all sections of society,
it was still supported by the strong military, bureaucracy and
Golkar, the largest political organization.
"If they still give their support, I don't think the students
can make a change," he said.
He explained that many governments in the world would not dare
take painful reforms, including raising fuel prices, amid
economic hardship, but that President Soeharto did.
"This indicates that the strength of the current government is
still there," he said.
He also added that although the country's economic team
occasionally made confusing remarks, they were regarded as
effective, including by the IMF.
"Although they're not the best, they managed to persuade the
President to implement the painful measures," he said. (rei)