The first 100 days of President Yudhoyono’s second term should have been celebrated for two important reasons: his landslide victory in the presidential election and the success of the Indonesian economy, which has weathered the worst impact of the global financial crisis. His re-election should have provided the President with a golden opportunity to consolidate the Indonesian economy for more solid growth in the years ahead.
But instead, his first 100 days in office turned out to be the most turbulent days in his presidency.
SBY’s weak and confusing responses to a failed attempt to undermine and discredit the Corruption Eradication Commission (KPK) and the alleged abuse of the Bank Century bailout funds have angered the public. As criticism and anger became widespread, SBY’s first hundred days turned into a nightmare, especially after the possibility of impeachment was voiced by some members of the parliamentary inquiry committee, now conducting an investigation into the possible irregularities in the Bank Century bailout.
SBY found himself being cornered and spending most of his time thinking about how to react to the situation. As energy and resources of the government are being channeled into the investigation of the Bank Century debacle, the “first 100-day agenda”, which was meant to be the hallmark of the President’s second term, has been relegated into an obscure sideshow. To the public, they are no more than routine internal affairs of government ministries.
The “first 100-day agenda” consists of 65 programs, including 15 that are considered to be priority programs. The 15 priority programs covered several critical issues that need to be urgently addressed, such as improving the investment climate, infrastructure projects, health care and education (bridging the gap between skills needed in the labor market and subjects taught at schools). But the most well-known program is focused on fighting judicial corruption, as this issue is the closest to the people’s sense of justice.
The government realized there was no chance of implementing substantial programs within the first 100 days, so from the beginning, it acknowledged the government would only produce plans and program formulations.
But according to SBY, “proper programming and planning would ensure 30 percent of success”. But if the government only formulated programs and agenda, it would suffer a loss of credibility and trust as people have high expectations of what the government should deliver.
Realizing their capacity was limited; the government said it would implement small programs, not politically sensitive, that could be easily carried out. If these small programs can be implemented, the government expected it would improve its image and therefore implement more difficult programs in the future. The approach of implementing incremental reforms poses the risk of creating an image the government does not have courage to carry out difficult and politically sensitive policies.
SBY has acquired huge political capital from his landslide victory in the presidential and legislative elections. He should be in a better position, compared to his first term, to push through some key reforms that in the past were difficult to implement due to fierce opposition from many interested parties.
The current labor and mining law, for instance, need to be reformed to spur more investment, employment and economic growth. If SBY shies away from these challenges he will squander his political capital and the opportunity to make changes.
The “first 100-day agenda” mentioned the acceleration of power plant construction. The building of power plants is relatively easier than the construction of toll road or ports. But even if the current government programs in increasing power generation run according to schedule, they still would not meet electricity demand.
Because of delays and neglect in investment during the decade after the Asian Economic crisis, electricity consumption in Indonesia dropped dramatically. Annual growth in per capita electricity consumption between 1999 and 2006 (5.3 percent) was only half that for 1987-98 (10.8 percent).
Indonesia’s electricity consumption in 2004 was only one third of the Southeast Asian average. This dismal consumption rate is worrying because economic growth cannot be accelerated without sufficient electricity.
The “first 100-day agenda” also mentioned the early start of the construction of the trans-Java toll road. Given the sheer size of the problems faced, no significant steps could be taken. Unlike electricity generation projects, road construction project involve masses of land owners, local governments and more complicated financing. The construction of several toll roads has been planned throughout the country, but because of those problems, progress is very slow.
This happens at a time when the country critically needs more roads to sustain its current economic growth. Again, due to neglect, poor maintenance and low investment, the road networks grew dismally at 0.4 percent annually between 1999 and 2006. This compared to a growth rate of 4.1 percent during 1987-1998, coincided with a high period of growth for the Indonesian economy.
What overshadowed the successful implementation of the “the first 100-day agenda” also overshadowed the prospect of achieving the government’s five-year plan target. In numerical terms, by 2014, SBY’s administration targeted a 7 percent economic growth rate, a reduction in unemployment to 5-6 percent (from the current 9 percent) and a reduction in the poverty rate to 8-10 percent (from the current 13-14 percent). Indonesia’s experience during the last five years has showed that with population growth at about 1.3 percent, unemployment declined when GDP growth exceeded 5.5 percent. Poverty then began to decline as growth accelerated to above 6 percent.
On this basis, and given that GDP growth is currently around 4.5 percent, reducing unemployment and poverty to levels of 5-6 percent and 8-10 percent respectively by 2014 will require a growth rate of 7 percent or higher much earlier than 2014, and preferably by 2010. So the target set by SBY for 2014 will be not be attainable unless he has the courage to implement radical and difficult reforms.
The writer is an economist.
| 
|
|
|
|
|
|
|