Update looks at unusual scenarios

Update looks at unusual scenarios

By Dewi Anggraeni

MELBOURNE (JP): Pessimism and optimism aside, Indonesia's
economy is on the mend. The Indonesia Update conference at the
Australian National University in Canberra, Australia, earlier
this month, looked at the country in the 20th century and in the
future.

While the 20th century seen from the angle of political
history uncovered more gloom than sunshine, according to some
economists at least, things are looking up. In other words,
economically we have hit rock bottom, and the only way is up.

Statistical data shows that consumers spending figures are
promising and so are realized domestic investments. Kelly Bird,
an economist working for the National Development Planning Board
(Bappenas), indicated that after contracting by 13 percent in
1998, then plateauing for most of 1999, the economy began to
record growth from the fourth quarter of 1999. If the current
economic growth trend is maintained, Bird said, the economy could
expand by 5 percent, a rate similar to that projected for
Thailand.

National income accounts and other real sector indicators
pointed to economic activity picking up in the first semester of
2000. Bird is optimistic that the economy will grow faster than
reflected in the official estimates.

There is a big question mark behind the banking sector,
however. The slow progress in corporate debt restructuring and
asset sales under the Indonesian Bank Restructuring Agency (IBRA)
has caused a sluggish growth in investment. Other contributing
factors mentioned are the lack of legal and judicial reforms
protecting the rights and obligations of creditors and investors,
and the seemingly unending political instability.

Many have also argued that the specter of national
disintegration has not been exorcised.

Usually, when the issue of national disintegration rears its
head, political analysts and observers will quietly shake their
heads, intoning various mantras to dispel the descending gloom,
mumbling how bad it will be for the government in Jakarta.

Java, it is believed, will wither and eventually be paralyzed
financially without the other islands. This indeed happened to a
degree at this conference, and would have left the participants
with a feeling of pity on Jakarta, but for one historian's views.

What the historian, Robert Cribb of Queensland University,
presented to the participants was not exactly brightly
optimistic.

Exploring decentralization with its accompanying promises and
pitfalls, Cribb pointed to the likelihood of Indonesians looking
for alternatives if it indeed failed.

Giving examples of fallen "empires" such as the Ottoman empire
and the Soviet empire, Cribb theorized that the common reason was
the supposedly dominant ethnic group grew tired of the burden of
the empire and decided to seek its independence.

Then he drew a parallel to Java.

Cribb argued that the conventional wisdom that densely
populated Java needed the other islands for its survival was the
thinking of the 19th century. We now live in an era of
globalization, where access to resources does not correlate with
political control.

In the last three decades, Java has gone through extensive
transformation. The rate of population increase fell
dramatically, and it enjoys the concentration of
industrialization and foreign investment.

As for necessary natural resources, an independent Java would
be able to access them from other places without having to have
political control over these countries.

Similar views were once aired by Ken Thomas, a retired
academic of LaTrobe University in Melbourne, in a discussion
group held regularly by the Indonesia Program at the University
of Melbourne. Thomas pointed out that economically Java was
stronger than other islands, because it was much less dependent
on the exportation of natural resource commodities.

Java was exporting manufactured and value-added items which
had attracted large domestic and foreign investments, Thomas
said.

Cribb also reminded the conference participants that Java had
a large and relatively well-educated population and sound
infrastructure.

All this only points to one thing: in a worst-case scenario,
Java is ready to take off, waving goodbye to even the resource-
rich islands, which would sooner or later come, cap in hands,
offering trade with Java. As Cribb said, independent Java could
be another Thailand or another Taiwan.

What is even more thought-provoking, tempting as well, Cribb
even suggested that Java could even begin to free itself of a
military which had learned the habits of brutality, corruption
and resistance to civil authority, by exporting them out. Surely
that was just a throwaway line to keep the participants awake?

This year's Indonesia Update certainly had a curious blend of
optimism and pessimism.

The writer is a journalist based in Melbourne.