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A good economy with rising social intolerance
By Umar Juoro
Monday, 21 February 2011
The Jakarta Post
Economic growth in 2010 was 6.1 percent higher than expected. Export and
investment have been complementing consumption to support growth.
However, the contribution of government expenditure from the national
economic accounting point of view is practically nil, as budget
expenditure was very slow to be disbursed. Economic stability is
threatened by higher inflation that forced Bank Indonesia (the Central
Bank) to raise its BI rate, even though the source of inflation is
coming from food, especially the rice price, not a monetary phenomenon.
There is the expectation that economic growth could be higher at the
level of around 6.3 percent in 2011.
There has been strong criticism that economic growth is only benefiting
the few, mainly referring to the fact that non-traded sectors, such as
telecommunications, retail trade, and housing and finance, have high
growth. Meanwhile the traded sector, especially agriculture and
manufacturing that absorbs most of the labor force, experienced low
growth. Data shows that unemployment and poverty levels are declining.
Nevertheless, the quality of employment is very low as most workers
still work in the informal sector.
Meanwhile, many people still live on the poverty line, while the
absolute number is still very high at around 31 million people. Despite
the inequality measure, Gini Index shows relatively low inequality, but
this is measured using expenditure and is not based on assets owned. The
perception is that inequality is getting higher.
The criticism is fueled by other pressing social issues such as the
increasing social intolerance as shown by the attack of Islam’s
Ahmadiyah sect followers in Banten, and the church burning in Temanggung,
Central Java.
There is no report or view that this religious intolerance is related to
economic inequality. However, it has the potential impact to reduce
investors perceptions on social stability in Indonesia. This seems
related to more the incapability of the police to handle an organized
attack by a certain group to the sect and other religious symbols.
Meanwhile, the government and religious leaders have differences in
seeing the problem. The government is practically inactive in protecting
certain religious group from violent attacks.
The administration seems incapable of handling the social issue well. As
a consequence, the popularity of President Susilo Bambang Yudhoyono is
declining with a low score in issues related to basic needs. The high
inflation related to food price creates a strong concern among the
general population. Social-religious intolerance has created a sense of
frustration especially toward the way the police are handling the issue.
All of these could derail the good economic prospect, if the government
cannot improve the condition that affected strongly the life of the
common people.
Meanwhile, political tension is heightening much earlier than
anticipated. Despite the general election being still far away — in
2014, a serious effort to undermine the administration has been
intensified. Certainly Yudhoyono can no longer run for a third term of
presidency. But his political opponents see him as a king maker for the
next presidential election, asking whether a presidential candidate will
come from his own family or his political circle. Additionally, more and
more politicians are put in prison by corruption watchdog Corruption
Eradication Commission so that they see this as a systemic effort to
undermine their political influence.
Similarly to other big issues that block the realization of the good
economic prospect, namely infrastructure, the high food price, social
intolerance and early intensified political tension have a lot to do
with the way the government works, and is not so much about the market
and private sector that vigorously support the economic growth. If these
issues cannot be handled well, they have the potential to undermine the
good prospects for the economy.
Certainly, the high food price is a lot to do with the extreme weather
and the increase of food price in the international market. But the
failure of the government to improve the food security, distribution and
infrastructure contribute significantly in forcing the food price to
become much higher than what it should be.
Meanwhile, the early heightening of political tension is a consequence
of the process of democracy toward its maturity. In this case, what the
government can do is to keep the
No doubt, Indonesia has high potential for economic development with
higher quality growth that is accompanied by equity. The question is
always about how to make it happen. The role of the market and the
private sector has been quite good so far.
What is inadequate is the role of the government to contribute properly
to economic growth and facilitate for the higher participation of the
lower group in the economy, while at the same time provide adequate
infrastructure and maintain economic stability, especially related to
inflation.
While Indonesia is a pluralistic society, the state should guarantee
this can continue, and give protection to any parts of society from
arbitrary harassment from other groups of society.
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