Unfair practices in RI inefficient: Economist

JAKARTA (JP): Indonesia needs to resolve several problems in its economy in order to face global trade liberalization effectively, a prominent economist says.

Djisman S. Simandjuntak, executive director of the Prasetiya Mulya graduate school of management, said here on Saturday that Indonesia must make several adjustments in its economy because ever since its independence in 1945, "it has never really fancied a market economy".

"But no doubt, a global free market will soon evolve and capitalism is apparently the direction in which most countries, including Indonesia, are heading to now," he said.

Djisman was speaking at a discussion on a newly-published book, Pasar Bebas, Keadilan dan Peran Pemerintah (Free Market, Justice and Role of Government) written by Dr. A. Sonny Keraf, a faculty member of the Atma Jaya Catholic University in Jakarta.

The discussion was also attended by speaker Pande Raja Silalahi, a staff member of the Center for Strategic and International Studies.

Djisman said that in order to be competitive on the free market, Indonesia must solve its problems of unfair domestic competition, rigid price controls, weak social infrastructure and the slow speed of human capital accumulation.

"Domestic competition in Indonesia implies that the closer you are to the center of power, the more economically strong you are likely to be," he said.

On human resources, Djisman said the government should allow the market, or the private sector, to be more involved in accumulating human capital. By involving the private sector in education and training, he said, better human resources can be more quickly accumulated.

"The future will see a 'brain competition' between nations," he said.

Commenting on price control, he said he believed that Indonesia would be better off without the government interfering too much.

"I don't know how the government regulates prices here ... but they definitely play a major role. In a market economy, on the other hand, prices are created," Djisman said.

The more the government interferes with prices, the more uncompetitive they become, he said.

Keraf said in his presentation that the government often intervenes in the "wrong places". "Where no intervention is needed, (the government) comes in, but when it is needed, it is not there," he said.

He said that in deciding where and when to intervene, the government could consider Article 33 of the 1945 State Constitution.

Article 33 states that: (1) the economy shall be organized as a common endeavor based upon the principle of the family system; (2) branches of production which are important for the State and which affect the lives of the most people shall be controlled by the State; (3) land and water and the natural riches contained therein shall be controlled by the state and shall be made of use for the people. (pwn)

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