H

em>Hatta Rajasa. JP/P.J. LeoThe government is gearing up to weather the turbulence in the global economy that poses risks to the country’s robust growth. Coordinating Economic Minister Hatta Rajasa recently talked with The Jakarta Post’s Hans David Tampubolon and Rendi A. Witular on strategies to cope with the global uncertainty and coordination among economic ministers. Here are excerpts from the interview:

Question: Apart from soaring global oil prices that will test the state coffers’ ability to finance energy subsidies, what other risks will the country face this year?

Answer: Our economy is heavily affected by the global economic situation. Global economic growth has been contracting for some time, indicating a prolonged slowdown in the world’s economy. This slowdown will obviously reduce demand for our goods worldwide. In a direct context, we don’t have a huge export exposure to Europe, which is the epicenter of the global economic turmoil. However, we will be severely hit indirectly from slowing demand from China and Japan, our largest export destination countries. The crisis in Europe will directly decrease demand for Chinese and Japanese goods, which will eventually reduce demand for our exports in those two countries. An economic slowdown in China and Japan will pose direct risks to our economy.

How do you counteract a decline in exports to maintain higher economic growth?

We must, of course, note that our exports only account for around 25 percent of our gross domestic product [GDP], and therefore the first thing we need to do is to utilize our huge domestic market. That’s why I always emphasize, in every coordination meeting, improving our industries’ competitiveness, maintaining our guard at our import gates to help protect local products, boosting the appetite for local products and accelerating infrastructure development by building connectivity to smooth out our logistics.

How will you accelerate infrastructure development if the newly endorsed Land Acquisition Law is not implemented soon due to the absence of implementing regulations?

We will only need one Presidential Regulation [perpres] for the law to be fully put into effect. The perpres will include comprehensive and detailed legal guidance on how to acquire land for infrastructure. We’re aiming for the perpres to be officially issued in March. The important issues in the perpres will mainly revolve around efforts to combine justice and certainty. We are ensuring that landowners whose property is vested by the state in the public interest can be fairly compensated and treated. We will ensure reasonable compensation for vested property by establishing an independent appraisal team that will determine the land value. If the landowners are not satisfied with the determined price, the team will carry out another appraisal and will try to convince the landowners about the price. If the owners remain unsatisfied, then the case can be taken to court, and within one month the court must issue an official ruling, and this ruling will be final. So there will also be a time certainty for investors in the process of acquiring land. The process will no longer be lengthy and there’s a certainty that it will be settled in a timely manner. Compensation for landowners will be made flexible in which they can undertake a land-swap mechanism and relocation. All of these things will be included in the perpres.

Coordination among ministers has been cited by businesspeople as contentious. How do you actually coordinate the economic team, particularly when some of them have differing opinions?

I want to emphasize that a coordinating minister does not have the authority to take over any other minister’s portfolio or authority. A minister, as mandated by the law, has full authority to determine the policies of his or her ministry and he or she is responsible directly to the President. The President, through a Presidential Regulation, mandates a coordinating function to coordinating ministers. The coordination being discussed here does not mean taking over a minister’s jobs or authority. That is the essence of a coordinating function. As a coordinating minister, I have the authority to conduct a coordination meeting that will decide policies on certain issues, such as a market operation to maintain food prices. If there are differences among ministers, I am normatively obliged to coordinate and to harmonize the differing ministers. We all meet then we will try to reach an agreement which will then be settled as policy. Regarding differing statements made by ministers in public, I cannot control what people want to say. For example, in the fuel-price increase issue, I believe all ministers have agreed that a rise in fuel prices is just impossible under the current state budget law. But if a minister says that he or she believes a price increase should be applied, it’s their right to say so. However, at the end of the day, we will always try to work together to find the best solution to any issue.

Do ministers regularly come to you if they have problems instead of going directly to the President?

Not just ministers, ambassadors and businesspeople often come to me. South Korean businesses even have a desk at our office. In a week, I usually meet four to five ambassadors to help resolve problems plaguing foreign businesses.