Susilo told to fire corrupt officials to save economy

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.