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n navigating current global economic uncertainty, Indonesia needs to be prepared for potential risks that could adversely impact its economic fortune.

In today'€™s world, the ever more globalized and integrated economic environment calls for policymakers to work in situations more reminiscent of a constant war, where all lines of defenses should be considered and all policy options should be on the table.

With regard to this, one of the issues that should be addressed considering the current economic situation in Indonesia is the delicate relationship between the political reality and the need to maximize our economic potential that is at times prone to negative interferences.

Many observers believe that Indonesia'€™s political system has reached a mature stage after four successive peaceful presidential and parliamentary elections.

Democratization has worked reasonably well in Indonesia over the past 16 years or so.

But how this achievement will be transformed into sustained economic successes will need further scrutiny. To start with, political dynamics could have positive as well as negative consequences on the economic condition of any given country.

It is only logical that the system of governance should be constructed in such a way that would prevent any undue interference from either side '€” the market interfering with the political system or vice versa. This is even more necessary in developing countries such as Indonesia where political and legal issues are still very much a work in progress.

One of the most pressing problems now facing our legal system is how to strengthen the political immune system in the economic sector, so that democratic government can realize its potential rather than succumb to its pathologies.

In the case of Indonesia, this political immune system is essential and would play an important role in safeguarding against the '€œshort-termism'€ of the government and against possible future financial shocks that would require prompt and effective decisions by the epistemic authority.

There is value in having a regulatory regime that is onerous precisely because of its technicality, its complexity and the unpredictability of its financial market.

Financial shocks have been more frequent in recent years and crises need speedy responses, without resorting to any lengthy political process.

Tim Geithner, the former US Secretary of Treasury and Chairman of the New York Federal Reserve, in his memoir on the 2008 financial crisis, Stress Test, repeatedly mentioned the dilemma that institutions such as the US Treasury had to deal with during the 2008 crisis: the role they were required to play by default and the often contradictory views of popular political sentiment.

The political immune system of a society is also expected to tame undue interference not only from political powers but economic interest groups as well.

This goes back to the idea that independence and competence needs to come from all sides.

The government should have its limits in affecting the normal economic functions of a society and private economic interests should be limited in their influence in championing their economic cause through politics.

But of course economic activities do not occur in vacuum, they require a stable political framework.

A good and stable political system, with an explicitly stated vision and strong institutions to diminish market abuses in fact is the very essence that enables economies to grow and reach their productive potential.

However, the nature of constant changes in politics permits the introduction of changes that in some cases could hamper economic growth adversely.

In most cases, though, political changes could represent a signal of what the markets think is truly necessary and in some cases are the only viable mechanism for which the needed changes can be achieved.

It could be argued, though, that this very function could be better handled by a system that promotes security for its economic pledges, while having independent institutions to judge necessities at least for both the short- and medium-term.

The political immune system is even more necessary in institutions concerning markets, monetary functions and conventional financial institutions, which are the essence of the day-to-day functions of a market economy.

After all, markets price stability and punishingly charge a premium for any sort of uncertainty. It needs assurance that once a vision is stated, the changes that could occur can only go to a certain extent '€” unless a long and deliberative process is involved '€” that are explicitly stated and protected.

We may say that at the current stage, the impact of the domestic political climate on Indonesia'€™s economic performance is still very much felt.

The Indonesian political risk is considered moderate by the market at the moment when we use Indonesian sovereign rating classification by international rating agencies as a proxy. This again confirms that political considerations do play an important role in business decisions '€” there is a sign that investors think of Indonesia as having the immense potential to reach a new height, but it nevertheless still has some homework to do.

Indonesia needs to develop a clear and strong political immune system in its economy that will protect the society not only on paper but in action.

Implementing this policy will undoubtedly create an efficient and effective economic system.

The government will then have the opportunity to concentrate on safety nets for the economic system.

In democratic society no party can guarantee a continuous position in power.

It is the right of any elected administration to direct their economic policy priority, but certain fundamentals in the economic life such as the stability of the macroeconomy, financial stability, the soundness of a financial system and certain affirmative actions for social safety nets need to be maintained and developed without reliance on the political process.

In a conflicting political environment, the need of having strong, credible and independent institutions in the economic sectors is even more pressing.

It would cost the national economy dearly in the medium- and long-term should politicians be unable to resist the temptation to mingle in any of those sectors.

Reforming the financial sector'€™s governance requires both political and legal reforms in order to uphold the ideal framework of the financial system.

Anchor economic institutions such as the central bank and the Financial Services Authority (FSA) will be very much needed to guard the direction of the economic future of Indonesia.