Java : Govt not explaining enough

THE FINANCIAL CRISIS & THE ASIAN HEARTLAND : INDONESIA
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East Java is trying to cope with the economic crunch, despite what its governor sees as a lack of information from Jakarta on the steps taken to lick the crisis

THE Governor of East Java, Indonesia’s second most-populated province, has acknowledged that the central government is not channelling enough information to the provinces on measures being taken to tackle the country’s worst economic crisis in 30 years.

Mr Basofi Sudirman said that this has made it difficult for him and the governors from the 26 other provinces to give the necessary information, in particular on the International Monetary Fund measures, to the 200 million Indonesians.

As a result, he noted, sentiments at grassroots level were disbelieving of what the authorities were doing. The situation had also fuelled demonstrations by students, labourers and other anti-government elements.

“I am sure the central government knows what it is doing to resolve the crisis, but it needs to communicate those ideas to us so that we can get support for them on the ground,” he told The Straits Times in an interview.

“Historically, we have had a very poor track record in explaining our policies to all levels of society. It leads to differences of perception and that is why a lot of basic problems still remain in Indonesia.”

He said that with regards the current situation, the government had yet to explain to local officials, for example, the significance behind the implementing of the IMF’s 50-point package.

“I am still not clear about the benefits involved if we follow the IMF because I have yet to get any information on the measures,” he said.

Despite the lack of information, however, he said that East Java authorities had come up with several initiatives to redress the problem of rising food prices.

This included organising pasar murah or markets offering staples at low prices in the cities and villages.

He was also encouraging the growth of cottage industries such as batik-making to soak up the rising number of unemployed in this province of 34 million people.

Analysts believe that up to two million people could have been laid off as a result of businesses going bust in the economic crunch. In the capital of Surabaya, Indonesia’s second-largest city, an estimated 700,000 people were without jobs, and many had returned to their villages in search of work.

Mr Tjuk Sukiadi, a member of the East Java branch of the Indonesian Chamber of Commerce, noted: “A lot of factories have closed. The worst affected is the industrial belt comprising Surabaya and Gresik, where some factories are operating at 40 per cent below capacity.”

This compares badly with other parts of the country such as North Sumatra and Central Java.

People in East Java’s rural areas have also been hit by rising prices. But they are better off than other provinces because East Java produces 40 per cent of the country’s rice supply. Governor Sudirman is adamant that there is no such thing as food shortages or starvation in his province.

“The demonstrations we get here have nothing to do with empty stomachs because there is enough food to feed all of us,” he said.

“It is more to do with a crisis of confidence in the government,” he added.

Mr Suharno, the head of the East Java Trade and Industry Department, said that while the cumulative inflation figure stood at a high 25 per cent, the province was inching its way back to recovery. This was evidenced from the fact that, for the first time last month, inflation was a low 4.5 per cent.

Exports and investment were also making a recovery. Foreign and local investors, who usually targeted the Jakarta/West Java region when building manufacturing facilities, were now looking at Surabaya and East Java.

Foreign-exchange earnings for the year’s first quarter stood at US$885 million (S$1.41 billion).

“The situation is under control and we are bucking the trend of slower growth elsewhere,” he noted.

In Surabaya city, glitzy shopping malls are half empty these days and most clothing and electronic stores have reported a drop in sales by as much as half.

Said Mr Djoko Susilo, the editor of the local Java Pos newspaper: “Some of the malls are likely to close down because they can’t get enough business.

On the flip side, however, Mercedes Benz, BMW and Volvo sedans are still seen on the roads; men and women in designer clothes and expensive jewellery are still gracing five-star hotels.

“It is no different from the other major cities in this country,” said Mr Susilo. “The distribution of wealth between the haves and have-nots are just so conspicuous.”