Susilo told to fire corrupt officials to save economy

Rendi A. Witular, Jakarta

Susilo Bambang Yudhoyono, who will likely be sworn in on Oct. 20, was encouraged on Friday by local businesspeople to crack the whip against thieving government bureaucrats so companies could produce their goods at lower prices for the domestic and international markets.

Businessman and chairman of the National Economic Recovery Committee (KPEN) Sofjan Wanandi said the most daunting task that the new government would encounter was to slash the high-cost economy, which was a result of corrupt bureaucrats and officials charging fees for everything -- legal and otherwise.

"In the first 100 days, Susilo should have the boldness to fire all corrupt government officials who have been extorting money from the business community," said Sofjan, who is also chairman of the influential business lobby, the Indonesian Employers Association (Apindo), which specializes in industry- labor relations.

"If he (Susilo) manages to address the problem, the business community will gain confidence him and the government, and that in turn will help us all produce more affordable products for the local and overseas markets," he said.

Local and foreign businesspeople have been complaining incessantly over the last few years about the corrupt government officials' unending and often bizarre and lawless extortion. They also complained that other officials simply abused the existing regulations for their own personal gain or as a way to fund a "certain political party."

Based on a recent study by the Indonesian Chamber of Commerce and Industry (Kadin), at least 35 percent of local companies' production costs are used to service such expenses, ranging from extra fees for goods clearance in ports to the cost of giving "cigarette money" to all the policemen stationed along roads.

The high-cost economy has also been blamed for the low competitiveness of the country's products overseas, slowing export growth. Export activities have long been expected to become one of the main engines in accelerating the economic growth, but the sector has never really taken off.

Reviving investor confidence in the economy and the government is crucial as the country badly needs fresh investment to accelerate growth in the economy, which has been expanding at a meager rate of around 4 percent during the past couple of years mainly driven by domestic consumption as investment and export performances remain weak.

Chief economist of DBS Vickers Securities Ferry Yosia Hartoyo said Susilo should be able to ensure legal certainty in the business community and boost law enforcement in his first 100 days in office, in order to revive the confidence of the banking sector to channel more of their loans to the real sector.

"We don't need foreign direct investment to help drive the economy. Funding from local banks is actually enough to revive the real sector, which will eventually create new jobs and derive taxes to the state," said Ferry.

According to Bank Indonesia officials, excess liquidity in local banks is estimated to reach around about Rp 200 trillion (US$21.88 billion). But according to Kadin, the excess is about Rp 400 trillion in total.

Ferry also highlighted the need for the new government to immediately raise fuel prices in a bid to cut losses caused by the huge cost of fuel subsidy that could cripple state finances.

"The new government should cut the subsidy by this year ... Subsidy for the fuel can instead be used as an incentive to help spur economic growth," he said.

The budget committee of the House of Representatives and the current government have decided to cut the fuel subsidy for this year from the proposed Rp 63 trillion (about US$7 billion) to Rp 59.2 trillion.