Why Megawati's party has lost people's support

Why Megawati's party has lost people's support

Ronnie H. Rusli, Senior Lecturer, Postgraduate Program,
University of Indonesia, Jakarta

Although the results of the April 5 legislative election are
not yet fully in, an irreversible trend is already emerging
showing that President Megawati Soekarnoputri's Indonesian
Democratic Party of Struggle (PDI-P), has lost a good portion of
the support it gained in the 1999 elections.

Since PDI-P emerged as a party in 1997, Megawati Soekarnoputri
has always held on to the party leadership. The President and the
party are one, and projected as such. Therefore, the party's
performance has a strong correlation with her performance. The
decline in support for PDI-P is a reflection of the party's
popularity and waning confidence in her leadership. Though the
extent of this decline will be determined by the final outcome of
the elections.

The widely publicized failure of Megawati's leadership is well
documented. In sum, it is attributed to her failure to push the
reform agenda, a commitment that brought about the party's
success in the 1999 elections.

Since President Megawati took over from Abdurahman "Gus Dur"
Wahid in July 2001, both PDI-P and the President have failed to
live up to the people's expectations. She has failed to deliver
on her promises.

The corruption, collusion and nepotism (KKN) issue, which was
the main factor behind the fall of Soeharto's administration, was
reignited by Megawati's administration. The Megawati government
was widely perceived to have tolerated and even actively
participated in KKN. Many observers have commented that in the
slightly over two years of Megawati's national leadership, she
lifted the practice of KKN to new heights.

The Megawati administration fared no better in managing
domestic affairs. Some of her major failures include her
reluctant response to terrorist threats, which perceivably led to
the tragedy of the Bali bombings of 2002 and Marriott Hotel
bombing last year. She failed to push law enforcement authorities
to act decisively against terrorist suspects and tolerated the
substantially reduced charges against the leader of Jamaah
Islamiyah -- a suspected international terrorist.

Her erratic policies on Aceh, Poso and west Irian have caused
mistrust and confusion. She failed to resolve these conflicts.

The decentralization program introduced in 2001 is not working
well due to her weak administration. Regions are empowered with
stronger autonomy and wider access to resources. However, they
have generally failed to deliver the developmental results
expected under a well-managed decentralization program. Increased
corruption, and mismanagement at a local level was evident and
eroded the people's confidence in decentralized governance.

In sum, she led a government that "did nothing" and tolerated
and expanded the practice of KKN.

The administration claims to have restored macroeconomic
stability by a steady growth of four percent over the past two
years, and been responsible for declining interest rates, a
stable rupiah and increased foreign reserves.

But these have not contributed to sustainable growth with job
creation and increased investment. Growth has been dependent
largely on domestic consumption. The US$800 per capita today is
still far from the almost $1,000 per capita achieved pre-crisis.

On the other hand, the more productive state assets in the
banking and service sectors have been disposed of, but there is
no corresponding decline in the overall level of debt. The total
national debt, at around US$130 billion, comprising external debt
of $65 billion and an equivalent amount in domestic debts would
sabotage any gains from economic growth.

The investment climate continues to deteriorate, as reflected
by the continuing decline in foreign direct investment over the
past two years. Large investments in energy and mining sectors
have been put on hold due to confusion from conflicting
regulations at the center and at regional levels. The
administration fails to deal with these issues decisively to
generate investment and new job opportunities.

The administration highlighted the rising Jakarta Stock
Exchange (JSX) Index as evidence of an improved confidence in
economic performance. The nominal rises in stock prices are
symptomatic of speculation by "major players", and as reported
and investigated, the bourse was used by many as a "money
laundering" vehicle for illicit fund transfers.

New listings on the Jakarta bourse are limited compared to
other regional exchanges. The price movement of a few selected
stocks with large capitalization could have a substantial
influence on the JSX performance. It is known that the government
has been using its domestic pension funds to lift up market
performance.

The declining interest rate is not a true indication of the
soundness of the financial sector. Liquidity in the banking
sector has not generated lending to the real sector. Banks
continue to be reluctant to lend without a high-risk premium. The
increase in loans is due largely to the consumer sector, which
can be risky considering the tentative nature of economic
recovery.

The soundness of the banking sector remains fragile and many
banks are likely to encounter problems in the years ahead for
loans extended to favored conglomerates of the administration.
Banks continue to depend heavily on income from government bonds
to sustain their profitability.

The international community plays a significant role in
propping up the Megawati administration and her leadership style.
Favorable reports were published of her success in restoring
political and macroeconomic stability. These reports largely
ignored the reality of a weak administration that was growing
increasingly corrupt. Also, they gave rise to a false sense of
confidence that she was the only one who could lead the nation
after the 2004 election.

That the International Monetary Fund (IMF) rewarded the
government for regular compliance with the Letters of Intent
(LOI) was misleading. On several occasions, the government failed
to comply with the LOI and the reform timetable was conveniently
readjusted, and timely disbursement maintained the reinforcement
of a surreal sense of macroeconomic stability.

The policy of accommodation by the international community
toward Megawati and her administration emboldened her to continue
to "do nothing", and tolerated all the bad governance that has
been practiced under her by her immediate circle.

Megawati's immediate circle is a "party" that no one was
willing to call an end to, despite the bout of "drunkenness" --
induced by over confidence on the part of Megawati and her
administration -- that they could do no wrong with the
international community fully behind them.

The resources available to -- and reportedly spent by -- PDI-P
on the 2004 elections so far could not possibly have been
accumulated by a party that only had its modest beginnings in
1997.

The 2004 elections and the likelihood that PDI-P will become
the number two faction of the House of Representatives
demonstrate that in a democratic election, the people vote with
their consciences in search of an effective and sound government
which can practice proper governance.

A senior PDI-P executive, State Minister of National
Development Planning Kwik Kian Gie -- who is well-respected for
his stance on good governance -- commented on the performance of
PDI-P recently: "The people are very clever now. They have used
their voting right to say PDI-P has performed poorly. The people
were not stupid when they voted".