[Nasional-e] How to put Indonesia back on the right track

[Ambon]

The Jakarta Post
Oct. 22, 2002

How to put Indonesia back on the right track
James Kallman, PT Grant Thornton Indonesia, Management Consultancy, Jakarta

A recent piece in The Jakarta Post reminded me of how far we are from making
the tough decisions that must be made if this nation is to get back on
track.

It's bad enough that the State Minister of Administrative Reforms Feisal
Tamin should be forced to admit that only 40 percent of the nation's four
million civil servants are professional and perform their jobs well. What is
worse however is accepting this as a burden the government must bear, citing
the extra expense to the state in providing severance pay if the
unprofessional civil servants were to be dismissed.

This is just the old-fashioned thinking that continues to hold the country
back. It's all right to say, "for the time being we can only encourage them
to work harder and improve their job performance," but this only compounds
the problem. For by next year there'll be another year's service to add to
their severance pay. And as has been found in countries the world over, the
security of working for the government -- be it in state-owned companies or
the civil service -- has never been the greatest spur to productivity and
self-fulfillment.

No, the simple truth is that we cannot afford not to dismiss those who are
incapable of performing their job in a professional manner. That is what
happens in the private sector and there can be no exceptions for the
governmental sector. Facing the challenges of globalization, and 2020 is
already beginning to loom large, it is a case of either shaping up or
shipping out.

Simple logic also tells us that if 60 percent are not performing properly,
then the other 40 percent must be shouldering the load. Thus in reality,
Indonesia does not need one civil servant for every 50 or so of its
citizens. The point is not lost either that if we had fewer civil servants
then we could afford to pay them better. This would both reduce their need
to bolster their current paltry incomes by nefarious actions and attract a
higher quality of future intake.

Some might argue that with some 40 percent of the nation's 100 million
workforce currently either unemployed or underemployed, now is not the time
to take such action. This is the call too from employees of state-owned
industries who decry privatization out of the fear of losing their jobs. But
in the age of globalization everyone must pull their weight and it is a
government's duty to ensure that its civil service is both efficient and
cost effective.

This is not to suggest that we should cut the unprofessional workers adrift.
Far from it, for a portion of their severance payments could be earmarked to
help them establish small micro-businesses, which in reality form the
backbone of the local economy.

Thus instead of adding to the unemployment figures there would in fact be
job creation, as each business would need an extra pair of hands or two.
Plus this would be productive work that adds to the circulation of money
within the economy. For despite their essential nature, civil servants do
not contribute a single rupiah to the nation's GNP.

Restructuring is a word bandied about in upper echelons, but unless the
political will exists to put it into practice there will be no international
belief in Indonesia's seriousness in tackling its economic problems. And at
the present time, international credibility is of vital importance in
attracting foreign investment, which has been on a steady decline since the
late 1990s. Indonesia remains the only country in the region with capital
flight.

That restructuring builds investor confidence can be seen in the movements
on international stock markets. Companies that carry out radical rather than
piecemeal restructuring are rewarded by more robust share prices.Investors
are prepared to shrug off the one off costs of the restructuring process,
realizing that the company has recognized its past complacency and tackled
its problems in a positive manner.

What holds true for individual companies also holds true for nations.
Indonesia is by no means alone in countries that have undergone economic and
political crises in recent times, for in many ways Indonesia's problems are
mirrored in the current woes of Argentina, or in the not so distant past,
Mexico.

Yet there are examples closer to home, economically afflicted at the same
time as Indonesia. Thailand and South Korea however have shown far more
resilience in bouncing back, particularly the latter that has enforced
restructuring despite opposition from its workers.

Government is not about winning popularity contests, but about taking the
actions necessary to produce future benefit for the populace as a whole. At
times these actions may not be popular, but if the government is open and
honest in explaining the necessity for its policies then the majority of the
electorate will tighten its belt and look forward to the benefits that will
in time accrue.

Failure to formulate and implement such actions constitutes a betrayal of
the people's trust, which in a true democracy usually results in a change of
leadership at the next elections. This is why we can't afford not to make
those tough decisions necessary to put Indonesia back on the right track;
and not tomorrow or next year, but now.




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