Social Justice the Only Way
By Faisal Basri*
AsiaMad-Column
There is a joke going around Jakarta at the moment that looks at the way each of the nation’s presidents has abused particular articles of Pancasila. President Sukarno abused the first principle, belief in one God, through policies such as Nasakom (nasionalism, socialism & communism).
President Suharto manipulated the second principle, humanitarianism, by shooting people, kidnapping them. The third president, Habibie, abused the third principle, of a united Indonesia, by letting East Timor go. The fourth principle is consultation and consensus, and Gus Dur did not want to consult anyone, especially the parliament, so he never accepted the idea of consensus.
That leaves the fifth principle of Pancasila, social justice, and if Megawati Sukarnoputri cannot give us social justice, there’s nothing less. It’s a joke, a story, but a very timely one.
There is a cultural problem within this principle of social justice. Many people feel uncomfortable with the choice of Jacob Nuwawea as Manpower Minister because he used to be a workers activist, or workers provocateur. This is the time when we have to create a situation where the worker represents something more than a factor of production. The worker needs to be respected. There is a momentum in this direction internationally. Indonesia is being forced to change its attitude because investors do not only come to a country where labor is cheap, but also because there is the potential to improve productivity.
Second, one major threat arises from social pressure in which the crime rate is increasing extraordinarily, people have their cell phones stolen in broad daylight by youths bearing axes, all of which is occurring because there are no jobs. We have to create as many jobs as possible. The private sector should be able to do its work with a minimum of interference. The government, albeit with the very small amount of money in the budget for non-recurring expenditure, has to be focused on the rural areas and on the agriculture sector, because this is where 50% of the population exists and where the pockets of poverty are worst. If these areas are stimulated with infrastructure projects to improve factors like roads, irrigation and so on this will create work. We can say there will only be around room in the 2002 budget for Rp20 trillion that can go directly to the villages to create jobs, create income that will then be put back into the economy again through the purchases of daily necessities and low-cost consumer items. Much of these items will be low-tech, low import content and many will be produced by small and medium enterprises. There is a significant multiplier effect.
This cannot be done now, but a program like this should be incorporated into next year’s budget. Both Megawati and Hamzah Haz are from populist parties. There is no excuse for either of them to be afraid of taking moves such as cutting fuel subsidies, because they are only enjoyed by people like us (middle class). We need cultural, structural adjustment. Megawati has to convince her people that this is the best way out of the problem, but it requires strong political determination.
All of these programs should have a strong fundamental basis in social justice. We need a redistribution of the burden. The burden, Rp650 trillion, the cost of the crisis, is being borne by the people through the national budget. Simultaneously, taxes are being raised, subsidies reduced, and it’s the people who are hurt. Small businesses now have to pay a tax on turnover. It’s crazy at a time when there are plenty of the rich who do not pay taxes properly. One asset that can be used in redistribution is asset dilution, from these rich conglomerates. There is Government Regulation no. 17 that allows this, but it has not been used once. The personal guarantees from the private wealth of these people must be taken. They have misbehaved, so a portion at least of their assets should be taken, controlled by the government and then sold to the public.
This is a rich country but we are unable to capitalize our assets. What is the wealth of yahoo.com? Nothing, but it has achieved a market cap as high as $80 billion dollars. Pertamina should be able to claim proven reserves as assets. We need a breakthrough so that Pertamina can do this, make sure its accounts are waterproof, and go to the capital markets. I don’t think it would be any problem to raise $10 billion. This can be immediately used to pay off debt. This is not like Rizal Ramli’s plan to sell bonds based on income (securitization of the future government revenues). This is not good, because we would have been taking the consumption of the next generation. There is nothing wrong with capitalizing on our true assets.
There has been a lot of argument about Semen Padang, with the people of the area saying it belongs to them, so that Cemex has not been able to go ahead with its plans to buy a majority of its owner, Semen Gresik. The people of Padang need to be told that if they think the cement plant belongs to them, well, go ahead and pay for it at market price. I have told people in Padang never, never consider changing ownership to regional government. Corruption will increase. Even now, if members of the regional parliament want to go anywhere, they demand the payment from Semen Padang. We also need a program of strong public relations to make people understand that nationalism is worthless on its own.
The job of the politicians and the President is to show people that these actions need to be taken. If we sell now, we get cash, if we wait a year because everyone says this is not a good time, we face all sorts of incalculable factors. It is not enough just to talk. Up until now government support for small and medium enterprises has been no more than rhetoric, but there is a lot that can be done. The government has never been serious in its approach on this. Compare our situation with the United States, a liberal capitalist economy. There they have an enormous range of agencies that assist small and medium enterprises. We have not touched the basic problems. We can overcome all of our problems, but the distortions of the economy have to be corrected first.
* Faisal Basri is a leading economist from the University of Indonesia who now works as Rector of Perbanas Business School - Jakarta and Commissioner of Commission for the Supervisory of Business Competition (KPPU).
