All Roads Lead To Prosperity
The way of country’s development is often considered as one size fits all. America-led market liberalization and democratization idea overwhelms all over the world. The governments – especially in crisis – are pushed to embrace the liberal idea either voluntarily or forcedly. Indonesians experienced this dilemma in 1998 prior to the fall of Pak Harto. However, seeing what has happened in China and Germany, that long-standing tenet of liberalism or democracy should have been revised.
China is not a democratic country. It clearly deprived its citizens of democracy and freedom of speech. Even it ridiculously bans Facebook and Twitter. It also insists to maintain socialism, but socialism with Chinese characteristic. It also upholds irrelevant Communist Party that turns out to give an impressive result. The stability-create-prosperity idea proves right.
Tellingly, the Chinese pave the new way of modern government. Chinese reveals multi-party system is not the only option. The single party system can deliver the same outcome. In China, the Communist Party in power doesn’t mean that other best minds aren’t accommodated. Two of Chinese ministers are not the party members. The Chinese People’s Political Consultative Conference transforms to be a big think thank covering the China’s best minds and all stakeholders. It implicates that all policies comes from people rather than from an arrogant power.
China has challenged the democracy idea as the best system with compelling result. China begins to outperform America. The best account why the China’s system works is that meritocracy prevails. Let the best manage the rest. The leadership is always reinvigorated by regular succession. In short the scorching political clout is not the sake of power, but to do good for all people.
The other success story is Germany – the steadfast welfare state – where the free market idea is ousted. Americans frequently look down this communist-like system regarded as inefficient, unproductive and out-of-date system.
To exemplify, the German’s powerful worker unions don’t allow lay-offs which is impossible task during economic crisis. Theoretically, every company can hire or fire the workers in flexible way so as to keep the business responsive to the market. The flexibility makes the enterprises easily to be restructured and compete with new innovations. However, given such conditions, German’s companies are neither uncompetitive nor unproductive. Even they can survive in economic crises.
The recipe is likely that German enterprises didn’t have an America’s habit of outsourcing. They still produce machineries or simple tools which now associated with Chinese expertise. Certainly German’s products can’t be cheaper than China. Relying on their superior technology, they compete in quality rather than price. Now some pundits name German as China of Europe.
German’s economic system might be obsolete and travel the different path with other developed countries, but it really works.
Both paragons of China and German confirm that there is no single way of development. The long-standing democracy-lead-prosperity faith now can be juxtaposed with meritocracy-lead-prosperity faith. The free market does seek efficiency which lay-offs and outsourcing are ways of it, but Germans show how to manage them while remain competitive.
Sumber : http://imo.thejakartapost.com/erwin/2011/03/08/all-roads-lead-to-prosperity/
1. The governments – especially in crisis – are pushed to embrace the liberal idea either voluntarily or forcedly. (Pemerintah - terutama dalam krisis - didorong untuk merangkul gagasan liberal baik secara sukarela atau paksa.)
2. However, given such conditions, German’s companies are neither uncompetitive nor unproductive. (Namun, mengingat kondisi tersebut, perusahaan Jerman yang tidak kompetitif atau tidak produktif.)
3. Both paragons of China and German confirm that there is no single way of development. (Kedua ahli dari China dan Jerman mengkonfirmasi bahwa tidak ada cara tunggal pembangunan.)
After financial shock, RI ready to weather storm
Rendi A. Witular, The Jakarta Post, Jakarta | Mon, 01/16/2012 11:46 PM
For Finance Minister Agus Martowardojo, a massive outflow of foreign assets in September last year may have been his worse nightmare since taking office in May 2010, and it may not be his last.
At the height of the financial turmoil in Europe, foreign investors dumped US$3.2 billion worth of government bonds (SUN) within a week, more than double the $1.3 billion reversal during the height of the global financial crisis in October 2008, according to the central bank.
Foreign exchange reserves plunged by 8 percent from a record high of $124.6 billion at the end of August 2010, as the central bank flooded the market with US dollars to help sustain the rupiah’s value.
Foreign exchange reserves plunged by 8 percent from a record high of $124.6 billion at the end of August 2010, as the central bank flooded the market with US dollars to help sustain the rupiah’s value.
The foreign outflow not only caused the rupiah to depreciate by around 5 percent, but also drove the third quarter balance of payments into the red — for the first time since the first quarter of 2009.
If sustained, a negative balance of payments would have jeopardized the country’s ability to pay for essential imports or service its foreign-exchange debts.
“It was a lesson learned. The September incident warned us of the lurking dangers from Europe’s crisis despite our solid economic fundamentals,” said Agus on Thursday.
The incident has forced the fiscal and monetary authorities to put in place more comprehensive measures to help cushion the country from the crisis’ fallout.
Among the important ones, according to Agus, is a measure to help stabilize government bonds and securities in case of a drastic sell-off by foreign investors that would put pressure on the rupiah.
The incident has forced the fiscal and monetary authorities to put in place more comprehensive measures to help cushion the country from the crisis’ fallout.
Among the important ones, according to Agus, is a measure to help stabilize government bonds and securities in case of a drastic sell-off by foreign investors that would put pressure on the rupiah.
A steep depreciation of the rupiah would create several chains of devastating effects, such as soaring inflation, defaults on corporate debts and a depleting state budget with which to maintain energy subsidies.
Holdings by foreign investors have always accounted for a large share of Indonesian debt. As of Jan. 12, for example, 30 percent of the government’s tradeable bonds and securities worth Rp 732.8 trillion ($81.4 billion) were held by foreign entities, according to the Finance Ministry’s directorate general of debt management.
To help stabilize the bond market at a time of crisis, the ministry would buy dumped bonds by using an accumulated budget surplus (SAL) worth a total of Rp 97.7 trillion.
But the use of the SAL is subject to ratification by the House of Representatives within 24 hours.
If that is deemed insufficient, the government would instruct 13 cash-loaded state companies, including oil and gas company PT Pertamina, Bank Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia and pension fund PT Jamsostek, to purchase bonds.
“A financial crisis is usually half triggered by falling confidence and half by problems in [economic] fundamentals,” said Deputy Finance Minister Mahendra Siregar.
But the use of the SAL is subject to ratification by the House of Representatives within 24 hours.
If that is deemed insufficient, the government would instruct 13 cash-loaded state companies, including oil and gas company PT Pertamina, Bank Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia and pension fund PT Jamsostek, to purchase bonds.
“A financial crisis is usually half triggered by falling confidence and half by problems in [economic] fundamentals,” said Deputy Finance Minister Mahendra Siregar.
Indonesia’s fundamentals are deemed solid by economists, with controllable corporate and government debts, a healthy banking system, a low state budget deficit and relatively sufficient foreign exchange reserves.
“But that should not make us complacent or ill-prepared,” said Mahendra.
He said the government had upgraded the crisis management protocol (CMP) to deal with systemic risks resulting from a bank failure, such as that which occurred in late 2008 when the authorities had to bail out ailing Bank Century — now renamed Bank Mutiara.
Mahendra said that despite deadlock in the House in the deliberation of the crisis bill, known as the financial safety-net system, the CMP was still reasonably sufficient for the fiscal and monetary authorities to take immediate action in time of crisis.
Mahendra said that despite deadlock in the House in the deliberation of the crisis bill, known as the financial safety-net system, the CMP was still reasonably sufficient for the fiscal and monetary authorities to take immediate action in time of crisis.
But questions remain whether the authorities have the courage to immediately pass decisive measures amid risks of future litigation and political assaults resulting from the absence of a crisis law that provided legal grounds for their actions.
Former finance minister Sri Mulyani and Vice President Boediono fell victim to their good intentions in salvaging the country’s economy from the impact of the global financial crisis in late 2008.
Mulyani and then central bank governor Boediono approved the rescue of Bank Century whose bailout fund eventually soared more than tenfold to Rp 6.7 trillion.
The soaring bailout resulted in stinging rebukes of Mulyani and Boediono by politicians who cried fowl over their decision to save the bank.
The soaring bailout resulted in stinging rebukes of Mulyani and Boediono by politicians who cried fowl over their decision to save the bank.
Politicians have also called for their prosecution for allegedly profiting from the bailout fund despite two series of audits by the Supreme Audit Agency (BPK) that cleared them of any misdeeds.
“If you ask me whether we now have the courage to take necessary action during a crisis, my answer is yes,” said Mahendra.
“If you ask me whether we now have the courage to take necessary action during a crisis, my answer is yes,” said Mahendra.
His optimism was based on a decision to involve the Attorney General Office (AGO) and the BPK in providing legal clearance to protect the authorities from legal or political fallout in the future when taking drastic and decisive action during a crisis.
However, the government is still pushing lawmakers to pass the crisis bill immediately with no sign of the crisis in Europe abating anytime soon and economic recovery in United States still sluggish.
“Sometimes, good intentions are somehow misinterpreted. Decision-taking during a crisis not only involves economic fundamentals but also politics that undoubtedly pose a risk for us,” said Minister Agus.
Sumber : http://www.thejakartapost.com/news/2012/01/16/after-financial-shock-ri-ready-weather-storm.html
4. The foreign outflow not only caused the rupiah to depreciate by around 5 percent, but also drove the third quarter balance of payments into the red — for the first time since the first quarter of 2009. (Arus perpindahan asing tidak hanya disebabkan nilai tukar rupiah mengalami depresiasi sekitar 5 persen, tetapi juga mendorong keseimbangan kuartal ketiga pembayaran ke merah - untuk pertama kalinya sejak kuartal pertama 2009.)
5. Decision-taking during a crisis not only involves economic fundamentals but also politics that undoubtedly pose a risk for us,” said Minister Agus. (Keputusan pengambilan selama krisis tidak hanya melibatkan fundamental ekonomi tetapi juga politik yang pasti menimbulkan risiko bagi kami, "kata Menteri Agus.)
