Statistics agency attacks govt's industrial policy

JAKARTA (JP): The burden on the country's external balance of payment has prompted the government to irrationally pursue exports at all costs in order to raise badly needed foreign exchange, Hananto Sigit of the Central Bureau of Statistics (BPS) said yesterday.

Hananto, head of the bureau's center for statistic services, told a seminar that such an irrational industrial policy would not deepen the country's industrial structure nor provide more employment.

"That's because we are burdened by our external balance of payments," Hananto told the seminar, organized jointly by the Centre for Strategic and International Studies and the Padi Kapas foundation.

The country has been burdened by large foreign debts of up to US$110 billion and deficits in services, which is projected to reach $13.9 billion this fiscal year.

Consequently, Hananto said, the government lets footloose export-oriented industries, like those in garments, footwear and electronics, to remain in operation to contribute exports even though they are dependent on imported inputs.

"Their imported inputs range from 80 percent to 100 percent. So, we do not enjoy the linkage benefits from such industries. Nor does it provide full employment for our people," he said.

When the country was no longer burdened by large foreign debts and deficits in services, he said, the government would be able to develop a more rational industrial policy, which would focus on deepening the linkage.

Such a linkage was necessary to provide more domestic business opportunities and create more jobs, which were badly needed to reduce the wealth disparity in society, Hananto said.

Sjahrir, chairman of the Padi Kapas Foundation, said the wealth accumulated by the Indonesian Chinese minority had been so enormous that the government should take affirmative action to propel the deprived indigenous majority into the economic mainstream.

H.S. Dillon, an expert at the Ministry of Agriculture, said efforts to reduce poverty and minimize wealth disparity should include further empowerment of the agriculture sector in the country's economy because the sector still provided the most employment.

Hananto noted that wealth disparity in Indonesia remained large, with the majority of people living in poverty and only a small portion of the people living extremely well.

In 1990, for instance, 60.7 percent of all income in the country was accrued from business surplus or profits, and only 27 percent was from salaries and wages, including those of professionals.

"The business surplus is so large in Indonesia because it includes hidden economic rifts which are difficult to measure. Therefore, efforts to lessen rifts will improve most people's wages," Hananto said.

He also criticized the government's priority on wealth redistribution by asking the rich to help the poor through various mechanism, rather than the primary distribution of resources, to reduce poverty.

The number of Indonesians living below the poverty line dropped to 22 million in 1996, or about 11 percent of Indonesia's 200 million people, from almost 26 million in 1993.

"This figure, however, is largely underestimated. Indonesia's poor are still many," Hananto said.

The 1996 National Socioeconomic Survey defines people living below the poverty line as those living on Rp 900 a day in rural areas or Rp 1,300 a day in urban areas.

The 1993 socioeconomic survey classified those living below the poverty line as those surviving on Rp 600 a day in rural areas and Rp 900 a day in urban areas.

"Using the 1993 figures, if we increase the level in the definition into Rp 1,300 per day, then we will have 116 million poor people or 62 percent of the total population," Hananto said.

If the level was increased again to Rp 3,300 (about the same level of the 1994 average government-set minimum wages), the number of poor people would reach 177 million or almost 95 percent of the population, Hananto said. (rid)

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