Monday, January 28, 2008

Suharto s legacy: Indonesians remember economic stability alongside brutality

JAKARTA (Thomson Financial) - The death of former president Suharto has left Indonesians with a mixed legacy.
For much of his 32-year rule, alongside horrifying brutality and corruption, many Indonesians remember a period of economic stability and growth -- a record many say his four successors have failed to match.
"Indonesia enjoyed growth of 6-8 percent and single-digit inflation during Suharto. That is his plus side," said Juniman, an economist at Bank Internasional Indonesia (BII).
Suharto had a clear economic plan, said Juniman and "that is what we have not seen again in his successors."
Stability was a key priority for many of Indonesian s more than 200 million citizens, and many didn t care what it cost, said Winang Budoyo, an economist at Bank Lippo.
"He was good at keeping sufficient supplies of basic needs and their prices were stable," he said.
Suharto is most remembered in the international community for his human rights record.
"Suharto has gotten away with murder -- another dictator who s lived out of his life in luxury and escaped justice," said Brad Adams, Asia director at Human Rights Watch.
"But many of Suharto s cronies are still around, so the Indonesian government should take the chance to put his many partners in human rights abuse on trial," he said.
Arbi Sanit, a political analyst from University of Indonesia, said Suharto s death will unfortunately make it difficult for any efforts to seek justice from him or his allies or to retrieve assets lost to corruption.
"You can take his cronies to court on separate cases but they will just point at him (Suharto) as the mastermind, one thing which is hard to prove," he said.
Efforts to bring Suharto to justice have so far floundered, largely due to the difficulty of collecting evidence that he directly gave orders.
The government is seeking 1.4 billion dollars worth of damages and returned assets, allegedly accrued through a charitable foundation that Suharto chaired while in power, in a civil lawsuit which is still outstanding.
Calling in IMF
Suharto died Sunday, aged 86, of multiple organ failure, after a three-week stint in hospital.
The former president rose to power in 1967 after he played a key role in destroying the Indonesian Communist Party.
But by 1998, he was forced out of power as Indonesia s second president after an economic crisis led to student riots and violence.
At the end of his term, Suharto had to invite the International Monetary Fund (IMF) to help rescue the economy.
Since then, Indonesia has had four presidents -- B.J. Habibie, Abdurrahman Wahid, Megawati Sukarnoputri and current President Susilo Bambang Yudhoyono.
As the country puts the Suharto era behind it, analysts question whether Indonesia can find a leader who can deliver prosperity to the people and attract foreign investment to develop the economy.
Indonesian gross domestic product (GDP) fell 13 percent in 1998, the year that Suharto stepped down.
The government is expecting the economy grew 6.3 percent in 2007, and is forecasting that will accelerate to 6.4-6.7 percent this year.
Song Seng Wun, an economist at CIMB-GK in Singapore, said one big difference between Suharto and his successors is that "his administration was able to provide certain predictability and consistency."
"In him, you got somebody who could put things together and the country s macro-economy plans had a more definite platform," he said.
Since Suharto s dictatorial reign, Indonesian s political environment has changed with the central government forced to cede more power to regional governments on many issues.
Analysts broadly agree there is little difference between the Suharto s economic team and that of his successors in policy terms.
"But the point is at the top. Suharto had more absolute power," said Song.
Bank Lippo s Budoyo said there are many other factors behind the slow growth in the post-Suharto age, including the regional financial crises back in 1997-1998.
Still, "as far as policy making is concerned, the very top level must be strong and decisive," he said.
Foreign investment accounted for more than 30 percent of Indonesian GDP under Suharto, but shrank to about 24 percent in the third quarter of last year.
The tradeoff for Indonesians is increased freedom for the media, more democracy, and a decentralization of power, which has allowed regional governments the power to manage their budgets, and in many cases issue licences for doing business.
Song said that shift in power has created some uncertainty, which hinders economic activity.
"The idea is right but the country is not ready. The country probably still needs a person with a strong rule," he said.
aloysius.bhui@thomson.com
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