Hasil Pemilihan Umum Tahun 1971 di tingkat Provinsi dengan perbatasan provinsi yang disesuaikan dengan Tahun 2008
Kajian
Why the New IMF package will also fail to restore confidence 1998-01-16 The new IMF package for Indonesia has just been announced. The reform measures
cut away almost all remaining vestiges of monopoly, market distortion and blatant
favouritism which had long been criticised within and beyond Indonesia for over 25
years. Included too were assorted marketing arrangements which had long fallen
from the front pages of newspapers and from the rhetoric of permanently indignant
Government critics.
Included were tacit admissions of mistakes particularly from the IMF that trying to
depress domestic demand through fiscal tightness was an inappropriate option in an
economy already heading towards contraction. The agreement to permit a budget
deficit should, therefore, have been welcomed. Announced greater monetary policy
autonomy for the Central Bank should also have been read positively. To be frank
this package went further than anyone could have expected.
Yet the forex markets has fallen back below their pre-announcement highs. It could,
and no doubt will, be argued that expectations had been raised too high from the
depression of the week before. However this seems at complete odds with the fact
that this package went further than anyone had expected. So dashed expectations can
not adequately answer the lack of sustained enthusiasm post the announcement. This
suggests other factors continue to way down peoples'; sentiment towards Indonesia.
The scale and nature of Indonesia';s external debts represents one such factor. Indeed
it is accepted as common knowledge that Indonesia';s excessive (unsustainable)
foreign debt represents the Achilles Heel, which has led to the undoing of Indonesia';s
quarter century of economic advance. There can be little doubt that once the fact of
secure exchange regimes was breached, the rest of the external and then internal
structure began to crumble.
At the risk of being labeled a willing and deliberate heretic, I would suggest that the
whole debt issue is merely one manifestation, albeit the most profoundly
destabilising, of a more important flaw in the modern Indonesian political economy.
This flaw is not the quality of outcome, which even under the IMF Plan mark 2 is
impressive. Rather it is the quality of process. This refers to the quality of the
mechanisms which come together to produce the outcomes, including the impressive
outcomes. Regardless of what is now unfolding, it is an undeniable fact that the
economy grew by 7% per year for over 25 years. It is also an undeniable fact that the
standard of living of Indonesians have never been higher, nor life expectancies longer,
nor education opportunities so extensive. Upon the basis of these outcomes, we may
be tempted to ask; “so what';s wrong with the processes if they achieved such
outcomes?”
The answer to that question is revealed if we ponder the following series of questions:
1. What is Indonesia';s real level of external debt, public and private?
2. Upon what basis are these figures calculated?
3. Why is there such heated controversy over the simple arithmetic question of how
much is there?
4. The second IMF package was impressive. To what extent will it be implemented?
5. To what extent can lending institutions, including foreign lenders, seek redress
through the legal system to secure their assets held by bad debtors?
6. To what extent should lenders or indeed current asset holders expect impartial and
predictable processing of legal claims and counterclaims through the legal system?
7. To what extent can the existing legal framework and infrastructure cope with a
significant increase in corporate case loads?
8. More basically to what extent will the legislature be involved in either legislating
any of these reforms or in supervising these changes?
9. Indeed were the people';s representatives consulted in developing this package?
10.If not to what extent should we expect public support for this package of reforms?
11.In this regard to what extent should the business community, local and foreign and
investment community, local and foreign, expect a sustained level of support for
the implementation of the package?
12.What kind of popular support does this package have?
13.What legitimate means are there for determining such support?
14.In the absence of support, what approaches will have to be followed to ensure the
program is implemented, if indeed it can be?
15.What kind of impact could such approaches have on severely bruised confidence
levels about this country, domestically and internationally?
16.What kind of approaches are being made to bring community leaders, both formal
and informal, on side to support the reform and restructuring measures?
17.How can we tell if the program is being implemented?
18.In regard to the banks which were closed, what criteria were used to determine if
Bank A would be closed and Bank B would stay open?
19.Who was involved in determining which banks would be closed and which ones
would make it over the threshold?
20.What will the central bank do in future in regard to banks in contravention of
prudential limits?
21.How can we be certain such policies would be applied without fear or favour?
22.What was done before the closures to bring banks into line?
23.Who is responsible for banks continuing to operate when in breach?
24.Are these regulators to be held to account, and if so how would we know?
25.Cancellation of major infrastructure projects was accomplished on the basis of
what criteria?
26.How can project managers, employees, potential consumers and financiers to be
sure that their projects are not also about to be stopped?
27.What compensation can project managers, employees, potential consumers and
financiers expect from the Government/IMF as a result of the material losses
arising from the stoppage of these projects?
28.Who was involved in the process of deciding which projects to stop and which
were to go ahead?
29.Reopening the palm oil sector to foreign investment, what were the reasons for
closing this sector 3 months ago?
30.Why now a sudden about face?
31.Who was involved in making the decision to close this sector to direct foreign
investment, and reversing it?
32.Will anybody be held accountable/responsible for this destabilising policy flipflop?
If not, why not?
33.If yes, how could you actually tell?
34.More fundamentally what mechanisms are in place to ensure another flip-flop in
policy is not lurking around the door?
35.The introduction of the National Car Policy was in the national interest, so was its
closure. What were the core factors leading to an about face on national interest?
36.Is the National Car project really dead or just hibernating until the spring returns
economic growth?
37.Indeed can we believe that a return to growth won';t see a return to the distribution
of special arrangements in favour of particular groups, all, of course, in the
national interest or the interest of some underprivileged group in the community?
38.Who will be meeting the liquidation costs for the closing of the BPPC?
39.How will it actually be closed?
40.Will a free market emerge between cloves'; farmers, their cooperatives and
businesses, and users of cloves, especially members of GAPPRI (cigarette
manufacturers) emerge?
41.How can we tell if the cement cartel has disappeared?
42.What guarantees are there the APKINDO trade monopoly on plywood will not be
reconfigured to produce a new form of market distortion in this important export?
43.How can we tell if the Reforestation Fund is being used for related purpose?
44.How can we tell if IPTN is no longer in receipt of state subsidy?
45.Where will the funds collected for the 2130 Project now go?
46.How can we be assured that the removal of Bulog from market intervention in say
the wheat flour market won';t be replaced by a market distortion in favour of the
dominant producer? How could such an emergence be stopped?
47.The Central Bank has now been given autonomy to set certain key interest rates,
such as SBIs, presumably without regard to the Monetary Authorities. How can
the application of this authority be verified?
48.What are the key determinants and factors which will be considered by Bank
Indonesia in carrying out this new policy?
49.In regard to the financing measures to support SMEs and exporters, what criteria
will be applied in determining eligibility?
50.What guarantees are there that these funds won';t be misallocated for other
purposes or technically excluded groups?
51.What guarantees will there be that all agreed allocations for particular firms
actually gets to the firms concerned and are not consumed through above realistic
administrative charges?
52.Why is there an IMF official associated with such a high level national policy
making committee? When was the last time an IMF official was elevated to such
high office in a recipient country?
53.At whose desire was this appointment proposed?
54.Does not the perceived “need” for such an outsider suggest something about the
state of the policy making, implementing and supervision processes is not right?
55.What kind of socio-political and ideological response should be expected from the
populace, who have a demonstrated history of nationalist sensitivities? What are
the investment implications, especially for foreign investment, of a possible
nationalist backlash against the whole (allegedly foreign inspired) reform package?
Most of these issues relate to issues of public policy process. Confidence can be most
quickly established if there is some transparency in the way decisions are made. In
this regard, the policy making process could be considered like a step production line.
The decision making process
The first step is formulation, which is a complicated process of a particular group
reaching a conclusion about how to address an issue. It includes issues such as what
pressures have led to a need to have to reach a decision. It also includes issues such
as what factors for consideration will be prioritised, what interests are to be prioritised
as well as the more mundane issues as who will be involved in the decision making
process and what information inputs will be used to reach a decision about action. It
should also include an understanding of the strength of support for the decision, and
upon what bases dissent is based.
The decision is made
The second step is the announced results of these deliberations. The action plan
comes out of the decision making process.
The decision is implemented
The third step is the implementation process. This process should also include
effective supervision to ensure application conforms to procedure and stated policy.
The implementation is evaluated
The fourth step is review of results. Did they meet targets? What were the sideeffects?
Unfortunately in the case of Indonesia the crucial first stage generally takes place
outside the public eye. The whole process is simply too opaque to judge the level of
support for positions announced. Structures appear to be too unregularised to permit
a stable understanding of the decision making process.
While there is usually some clarity in the actual announcements themselves, there
often remain unanswered questions and ambiguities in stated positions. This
undermines the standing of the decision. While ambiguous commitments are
certainly not a trait specific to Indonesia, it is nonetheless a somewhat more common
habit here, and most probably arises from the consensus approach to decision making. {This document was written just after the infamous “;crossed arms standing over Pres.
Soeharto”; photo. At the time I was bed ridden with typhoid and recall being both
bored with illness and then very frustrated by what I thought was a stupid and
unenforceable agreement. If a key objective of these IMF agreements is to raise
market confidence in the economic management of the country concerned, then surely
this is an objective guaranteed to fail if the agreements are simply not able to be
implemented.
I recall laying in bed watching TV and listening to the assorted policies changes
which the Government had signed up to make, and concluding instantly that this was
impossible to achieve. These changes essentially would force the Government to
commit political suicide, and that was not going to happen – certainly not through
some agreement. The result of an unenforceable agreement, of course, will see the
Government abrogate these commitments, which will in turn further undermine
confidence, leading to further capital flight and to further weakening of the currency.
The ultimate impact of this unenforceable agreement would simply be to amplify the
Government's failings and accelerate its eventual demise, hardly a recipe for
rebuilding confidence.
In some ways I was surprised that much of the Jakarta commentariat took this
agreement seriously and actually believed that there would now be light at the end of
the crisis tunnel. To me it was just a technocrat's Christmas shopping list of
economically rationalist desires that was completely de-linked from political reality.
Even if we concede that each of the white elephants and sacred cows put up for
slaughter in that agreement were a drain to the nation, this misses the point of the
whole exercise, which was to raise the level of confidence in the system. Setting the
country up for another failure would simply fail to achieve that objective.
At another level, that is at the political level, the agreement did reveal that the limits
of reform to which the Government of the day could commit, was simply insufficient
to steer the country through the crisis. In essence the agreement declared the need
for “;regime change”;. One often wonders whether these IMF rescue packages are not
actually framed with such a logic in mind. I am not promoting some kind of
conspiracy or Dependency or Centre-Periphery theory, as the same could be said for
the impact of the Sterling Crisis and the UK's IMF program. Clearly the Thatcher
revolution, which finally killed British syndicalism, represented clear evidence of
regime change in this developed nation. I look forward to being corrected, but I can
only think of the example of Chile under Pres. Pinochet whose regime survived for
several years after calling in the IMF to assist Chile overcome its financial crunch in
1982. Perhaps it might be seen that any government calling in the IMF is basically
admitting its own failure to manage its economic circumstances.
The footnotes in this document were added on 1 January 2007, as I reviewed the
original document – all with the comforting distance of almost 9 years of hind-sight!
The comments are intended to provide both a little historic context that may now have
been forgotten with time and also to provide some auto-criticism of where I believe
my analysis was flawed or perhaps biased. From the original document I have also
corrected typing mistakes and grammatical errors without changing the integrity and
substance of what was initially written. The footnotes therefore do not represent part
of the original document.}
