`Black swan' of the Indonesian leadership

Stefan S. Handoyo ,  Jakarta   |  Thu, 06/04/2009 12:51 PM  |  Opinion

Indonesia is experiencing a fiesta of democracy in which everyone, even the most politically skeptical citizens, betting on who the next Indonesian president will be. Perhaps, too much importance is being placed on the results of presidential election. Suddenly, people are rushing to be the best political analysts, and arguing their favorite presidential pairs.

The latest Consumers Confidence Index survey ranks Indonesia at the top of the list, demonstrating the confidence of Indonesian consumers for the future of the economy, despite the global financial crisis.

The three presidential candidates are no exception in their confidence for the future of the Indonesian economy, promising supporters economic growth similar or higher than that experienced after the 1997-1998 financial crisis, should they be elected.

Despite differences in strategy, their confidence is certainly not without reason. Regardless of who among them will be the next Indonesian president, Indonesian economy will continue to grow. Indonesia's large domestic consumption base is an attractive factor that will continue to prop up the economy. The large population will also help stimulate the economy, because even if exports decline, locals will still buy products they need.

Just like China and India, Indonesia will increasingly become a major market for multinational corporations. Despite all the challenges and bureaucratic hurdles in improving the regulatory environment and the way to do business, the growing domestic market and abundant unexplored natural and human resources of Indonesia are too attractive to ignore.

In the weeks leading to the July 8 election, it is highly probably we will see an inflow of dollars needed to fund campaigns. Billions of rupiah will be spent by all three presidential candidates. Campaign spending in the next few weeks by all presidential candidates will somehow help the country weather the economic crisis, just as we saw in the April legislative election.

The recent surge in the Jakarta composite stock index actually has nothing to do with the presidential candidate pairing issues. Foreign banks and equity investors are still turning bullish on Indonesian equities and private wealth markets. Because of these factors, the predictions of some multilateral agencies that the Indonesian economy will only grow by 2 or 3 percent this year are probably too pessimistic.

We should not worry too much about the results of the election. Instead, we must join forces to enlighten our national leaders, among others, about the complex economic, political and social issues facing Indonesia today.

All the presidential candidates need to be constantly reminded that the global financial crisis has had dramatic social consequences, including losses of millions of jobs and posing serious hurdles for the Millennium Development Goals (MDGs).

The next president should have learned from the 1998 financial crisis that it was obviously the result of too much government intervention, not only because wealth was concentrated among certain individuals during the Soeharto regime, but also because immense power and a despotic economic dictatorship was consolidated in the hands of a few influential and politically well-connected businessmen and bankers.

The present global economic crisis also provides lessons that market mechanisms alone cannot work effectively, and free competition that relies too much on making easy profits as the only criterion has destroyed itself.

Let us all vote wisely on July 8. If we are outvoted by the masses who may decide to vote for someone with little experience and knowledge in national leadership, let us not think it is the end of the world. Instead, we must continue to work unselfishly for the common good, make the shortcomings of our political leaders irrelevant and build on whatever strengths they may have. That would be authentic nationalism.

The writer is an economist.

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