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Jakarta Post

Economist urges cutting down on 'vested interests' to free up growth

  • News Desk

    The Jakarta Post

Jakarta   /   Mon, April 29, 2019   /   02:01 pm
Economist urges cutting down on 'vested interests' to free up growth Economist Faisal Basri (The Jakarta Post/vny)

Senior economist Faisal Basri of the University of Indonesia has said that President Joko “Jokowi” Widodo must eliminate "vested interests" in the government that had been putting the brakes on economic growth.

While he did not specify what he meant by "vested interests", Faisal pointed to the promotion of state-owned enterprises (COEs) in all lines of business, and that this discouraged increased private sector participation.

“This country is too big to be managed only by SOEs. There are great potentials that will be lost if only one party is involved,” Faisal said at  a discussion on Saturday as quoted by kontan.co.id. He added that the government also needed to involve cooperatives and accommodate other initiatives.

“These vested interests have grown ‘fat’ on our economy, and they [the fat] should be burned to make our economy grow faster, not just for annual growth of 0.1 and 0.2 percent,” he said.

Faisal called on the President to form a working unit tasked with eliminating "the fat” in the economy that had frequently disrupted public-private cooperation.

He stressed that there was a need for the government to improve private sector participation in economic development, because many initiatives could emerge from private companies and other segments of society.

Faisal also called on SOEs to focus only on their core businesses and refrain from "improperly expanding" to sectors where private companies could contribute.

For example, he said, it was fine if state-owned cement manufacturer PT Semen Gresik developed a port to facilitate its business in East Java, but the company should not develop a port in Gorontalo. He also criticized state-owned construction companies for venturing into the hospitality industry by developing hotels. (bbn)