On a trip yesterday, I browsed The Economist magazine during the flight. I always enjoy the magazine, for the breadth of subjects they cover. This issue was that of March 5, 2005.
It had an article on Indonesia's recent decision to slash fuel subsidies. This comes as one of the first actions after a long period of inaction (the tsunami and cultural holidays did slow things down in the last few months). Yudhoyono (President) ran his campaign, promising to clean out the corruption that is inherent to Indonesia, but has done nothing to show for it. Another concern of his was the poor. The reduction of subsidies on various oils raised fuel prices by 30%, which has angered many. But Yudhoyono promises to direct $1 billion, from that subsidy cut, into social spending. He points out that the Indonesian government has been spending more on fuel subsidies than on education and health combined.
He is now using the media to reach the poor with the message that he is taking active steps to reform the economic system in Indonesia. One TV commercial features a tycoon's driver explaining to fellow workers how the subsidies have been benefiting the rich, not the poor. In truth, Yudhoyono did protect the poor in one big way with this subsidy cut. He is not allowing kerosene prices to increase. Many poor depend on kerosene for cooking and lamp light.
Indonesia still has a long ways to go, but it is refreshing to hear Yudhoyono (who interrupted his campaign to finish a doctorate in economics) draw attention to social issues in his country. His vice-president is reportedly more focused on immediate economic matters, like increasing bank lending and improving the country's infrastructure. If the two can continue working together, they might strike a balance that strengthens Indonesia. Indonesia isn't doing too poorly, but some of its neighbors (like Malaysia) are experiencing greater growth. It will be interesting to see where southeast Asia is at, 5 years from now.
I am curious to see what sorts of ideas Yudhoyono has for decreasing corruption in Indonesia. Corruption there seems as efficient of a system as the lack of corruption works in Scandinavia. Today's Jakarta Post reports that "stern action" is encouraged against any who are caught in corruption... hmmm... what exactly does this mean?
Also, I wonder how he will distribute the $1 billion into social spending? I've seen some of the government's "social programs" in Indonesia, and I have only observed inefficiency and lack of training among the government workers. But perhaps he will be more observant and creative with the government's programs than Suharto ever was. He does seem to have a softer side to him, balanced by that economist degree he now has.
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