Moderation is the avoidance of extremes. And this is what we believe will be on the cards for Indonesia in the next few years no matter who is elected as the next president.
All three presidential candidates have presented reasonably similar economic platforms that will seriously derail Indonesia's stability in our view.
At the end of the day, economic improvement for Indonesians is at the heart of every presidential candidate's campaign.
With severe economic disparities, "Thaksinomics" *populist economic policies aimed at the rural poor* is alive and well in Indonesia, keeping most people sufficiently happy, and tumultuous eruptions at bay.
Consequently, no presidential candidate is willing to suggest programs such as Raskin or BLT will be discontinued in the future.
The lack of economic drive is sparking little excitement in the choice of presidential candidates as the same old party leaders appear to be saying the same things.
Having said that, it is unlikely that the country will embark on exponential growth in the next five years.
To escape from this moderate economic grind, the next president must attempt to reinvent the manufacturing sector in order to create much needed jobs.
It is imperative that Indonesia must attempt to alleviate its dependence on the excavation-based (i.e. mining related) economy, which has the propensity to put wealth into the hands of a few.
In terms of manufacturing, the problem is that Indonesia has been losing competitiveness to the likes of Vietnam and China. In fact, Indonesia has been losing competitiveness to China since 1994 when the yuan devalued significantly.
The next government officials must also focus on agricultural improvement. In order to catch up with Thailand, Indonesia must provide free training and education to farmers.
This in turn will induce and enhance the entrepreneurship that is much needed in Indonesia. While entrepreneurs are aplenty, in most cases they tend to remain small due to impediments in government policies and institutional reforms.
Other development agendas in the next 5 years should include more spending on infrastructure, education, health care and social protection. On the latter, this means laying the groundwork for a future National Social Security (NSS) system that is lucid, feasible and affordable.
At the same time, further improvements in Indonesia's proven and successful social assistance and poverty alleviation programs such as PNPM, BOS and BLT must take place. However, in order for spending to be effective, institutional reform must also be accelerated.
On infrastructure, this is an old song that has been rehashed so many times. We believe the key is to pick a single major project and see it through, as opposed to attempting to do too many things without much success. It is high time that Indonesians come together in line for proper implementation.
Unless we all work together, economic growth in Indonesia is likely to remain below par, particularly as external demand for neighboring countries is likely to be lower going forward on the back of weaker trade and recovering commodity prices.
For Indonesia, with serious challenges posed by the increase in government debt and unwinding of monetary stimulus, moderate improvements and growth in the next five years should thus be seen as a blessing.
The author is the senior vice president and head of research at Bahana Securities
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