Tuesday, 30 June 2009

Economic Policy Proposed by Presidential Candidates Show Distinct Differences

There were clear differences in the economic policy proposed by president/vice president candidates Susilo Bambang Yudhoyono-Boediono and he rivals pairs Jusuf Kala –Wiranto and Megawati-Prabowo, wherein SBY-Boediono would continue Liberal Platform, while two other candidate duo Jusuf Kala –Wiranto and Megawati-Prabowo planned a change of course through a constitutional economic policy.

“In the event that the SBY-Boediono duo emerged as winners in the coming presidential election, they would continue the focus on stability of macro-economy” Handri Saparini of Econit disclosed this to Business News after acting as spokesperson in a discussion on Presidential whether to be run in one round or two rounds; the discussion was conducted by Soegeng Sarjadi Syndicate in Jakarta, Saturday [13/5].

Macro economic stability seemed to be set as absolutely unconditional, as they believed that macro-stability might energize the real sector. In fact they were two different things. They [the government] did not touch the real sector, because they believe that it was the economic stability which would energizes the real sector. The Notion that if the stock market strengthen meant the real sector would be jacked up was wrong, because the stock market was up due to the in-flow of “hot money”.

If the reference was macro stability, the real sector would be neglected. For example, to maintain the stability, inflation should be down-pressed, by increasing interest rate. The result inflation was controlled, but the real sector crumbled down.

Secondly, liberalization knows no correction. To illustrate, the traditional retail sector would be eroded by modern retail. Even if there were intention of the present Government to limit foreign retail to become one percent in Japan, such proposal could not be trusted because the basic belief was that the big [modern] retail should synchronise with the small [traditional] retail whereby they could synergize. The truth was that as long as the regulation were as the way it was now, such a mechanism was never feasible.

Meanwhile the JK-Win and Mega-Pro policy tend to be perceived as something frightening, because they would bring drastic change in the nation’s economic system. This was not extremely true, because change should not be brought overnight, but by stages. An immediate change would required fund from the state budget [APBN] which called for parliamentary approval. For example, in case the state budget would re-allocated to other sectors which differ form the current channel. Correction of a macro system could only be done by stages, but it must be done or else that foreign ownership at the Banking sector, which now has reached above 50%, might soar to 95%. On this aspect Prabowo stated that the money in government’s banks should be allocated to domestic needs. In other words, correction would be needed on the law of ownership.
Another example, Jusuf Kala stated that in terms in natural resources, for the time being natural gas should be allowed for export-meaning, in the short term gas should be prioritized for domestic needs. “That was something thinkable; but what about the present state where foreign ownership had reached 85% legal restructuring becomes a pressing necessity”.

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