***The return to investment-grade status is a fresh start. It's now up to officials in Jakarta to do something with it.
Indonesia's burgeoning economy held back by entrenched corruption William Pesek January 28, 2012 . It's a rare economic story that involves Facebook, God and credit ratings. Leave it to Indonesia to serve up a saga that speaks volumes about the obstacles facing south-east Asia's biggest economy. Although Indonesia doesn't often make global headlines, one event last week should have received more ink: Moody's returned the country to investment grade for the first time since the Asian financial crisis. It was an overdue recognition of how far Indonesia has progressed in the past 14 years. Another news item got far more attention: A civil servant, Alexander Aan, posted ''God does not exist'' on Facebook. He was beaten by a mob and faces up to five years in prison. Atheism is illegal in Indonesia, a predominantly Muslim nation of 240 million. Advertisement: Story continues below The real story is misdirected anger. One guy with a Facebook account ginned up more outrage than the public manages to direct at corrupt government officials who enrich themselves while more than 100 million Indonesians survive on $2 a day. That's the real affront, and it's a reminder of what's at stake. Incidents such as the attack on Aan serve as a distraction from the broader Indonesia turnaround story. As the US and France smart over losing their AAA ratings, Indonesia is quietly moving in the other direction. By 2030, Indonesia will be the world's sixth-biggest economy, surpassing Germany, Mexico, France and Britain, according to Tai Hui, head of south-east Asian research at Standard Chartered. It's on Goldman Sachs's shortlist to join Brazil, Russia, India and China as a ''BRIC'' nation. BRIICs? The trouble with such optimism, though, is that it doesn't take account of the obstacles to Indonesia's ascent. Two are worth exploring: China, and a sense of fatigue with reforms aimed at fighting endemic corruption. On a trip to Jakarta, where I met policymakers, business people and economists, a question kept popping into my mind: OK, now what? The concern is about complacency, of Indonesia believing the hype about its unstoppable trajectory and not acting to realise it. Much of the credit for Indonesia's 6.5 per cent growth goes to political stability. Since 2004, President Susilo Bambang Yudhoyono has reduced debt, negotiated a trade agreement with Japan and solidified the democracy that replaced a corrupt dictatorship. A torrent of money flowed to Indonesia in 2011, when foreign direct investment surged 21 per cent. But the caveats are important. Indonesia's economy is less open than Singapore's or South Korea's. Much of it is based on domestic sales of coal, metals, palm oil and timber. The goods it does export often go to China, which is emerging as the wild card in the equation. We can add Nouriel Roubini to the list of those betting on a significant slowdown for China. ''Export growth is slowing,'' said the co-founder of Roubini Global Economics. ''If they don't do something - stimulus in monetary and fiscal credit - the risk is that the growth will slow down well below 8 per cent.'' That may not sound so bad, considering China's gross domestic product expanded 9.2 per cent last year. But given the widening gap between rich and poor in China, the worsening global outlook and the general lack of growth engines, a Chinese deceleration would be a significant blow. The bigger issue is Indonesia's long and tricky to-do list. Along with improved economic fundamentals, Yudhoyono's team fought corruption and cracked down on radicalism in the nation with the largest Muslim population. At best, Yudhoyono has made a small dent in the vast kleptocracy of dictator Suharto's 32-year rule. Infrastructure is a hurdle, one more related to graft than is often acknowledged. Recent upgrades will reinvigorate Yudhoyono's push to double spending on roads, ports and airports to $US140 billion by the end of 2014. The question is how many of those billions will go into the pockets of corrupt officials. Only when Indonesia creates strong institutions - a more independent judiciary, greater accountability among public officials, a more aggressive agency to investigate graft - will big infrastructure projects do their part to generate growth and reduce poverty. This challenge shows how corruption is at the heart of so much of what ails Indonesia. The public needs to do its part. Demand for cleaner government is the key to raising the nation's ranking in Transparency International's corruption perceptions index. In 2011, it came in 100th out of 183 economies, a big improvement on 2004, when it ranked 133rd. Yet to get into the ranks of the world's top 10 economies within two decades, Indonesia must do better. The return to investment-grade status is a fresh start. It's now up to officials in Jakarta to do something with it. Bloomberg http://www.businessday.com.au/business/ ... 1qld7.html [Non-text portions of this message have been removed] ------------------------------------ Post message: prole...@egroups.com Subscribe : proletar-subscr...@egroups.com Unsubscribe : proletar-unsubscr...@egroups.com List owner : proletar-ow...@egroups.com Homepage : http://proletar.8m.com/Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/proletar/ <*> Your email settings: Individual Email | Traditional <*> To change settings online go to: http://groups.yahoo.com/group/proletar/join (Yahoo! ID required) <*> To change settings via email: proletar-dig...@yahoogroups.com proletar-fullfeatu...@yahoogroups.com <*> To unsubscribe from this group, send an email to: proletar-unsubscr...@yahoogroups.com <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
