RI NEEDS TO STRENGTHEN DOMESTIC ECONOMY

Andi Abdussalam


Jakarta, Aug 14 (ANTARA) - Indonesia's economy should not be trapped by capitalism and neo-liberalism but its development should be oriented to the people and for this purpose the government needs to provide incentives to strengthen the domestic economy, observers say.

        "The government should not merely make appeals for development of the domestic economy, but it should also provide incentives for industry and market players who are expected to help develop the domestic economy," economist Aviliani of the Institute for Development of Economics and Finance Indonesia (Indef) said on Friday.

        Aviliani made the remarks in response to President Susilo Bambang Yudhoyono's state-of-the-nation address before a plenary session of the House of Representatives (DPR) held in conjunction with the country's 64th independence anniversary.

        Ahead, the government will do its best to strengthen domestic economy and domestic market as a source of national economic growth.

        President Susilo Bambang Yudhoyono said in his address that Indonesia should strengthen its domestic economy and domestic market. "In the future we have to strengthen the domestic economy, the domestic market and we should never become dependent on potential exports as the source of our growth," the President said.

        "Obviously, therefore, an export-oriented strategy is not our choice," Yudhoyono said. On the other hand, the national economy should have a territorial dimension, with an economic growth spreading throughout the entire homeland, he said.

        "We should draw a lesson from the major economic crisis taking place at present, and produce great ideas on the direction and strategy of our economic development," he said.

        According to Aviliani, the government at present has turned the past economic paradigm which was outward looking into the present inward looking. She said that it was not easy for the government to change the country's economic paradigm because the economy so far has been a global oriented where tax tariffs were small or even zero percent.

        Therefore, economic observer Elfindri of the Andalas Univerity hoped that President Yudhoyono would formulate a special Indonesian development model in his second term of presidency.

        "The president should not be trapped by neo-liberal ideas because we badly need to formulate a special Indonesian development model," Elfindri, who is also private university coordinator for West Sumatra, Riau and Jambi provinces, said.

        He said that the formulation of a special Indonesian development model should be able to solve problems the country was now facing. Ideally the formulation should have been prepared within the first 100 days of the new government.

        "The concept should be in the form of a double track policy, namely how to create an Indonesian strategic competitive edge for industry and to solve problems being faced by the nation," he said.

        Elfindri said that the government so far had not yet been able to formulate a strategic competitive edge for industry which could serve as a core strategy. And this should become a trade mark for Yudhoyono in his second term of office .

        In formulating this, Yudhoyono is expected to involve all sides, all sectors in the departments, the business community and experts. "The formulations should not serve as a mere public statement because they are expected to create a new economic prestige," he said.

        In his address on Friday, President Yudhoyono pointed out several formulations of the country's economy. Indonesia's economic development in the future has to integrate even more the approaches of resources, knowledge, and culture at our disposal.

        "Indonesia's economy, the economy of 230 million people, economy of homeland covering an area of eight million square kilometers, should also be sustainable," Yudhoyono said.

        "The economic growth which we have selected and pursued is the growth with equity, in order to really bring about a sense of fairness," he said.

        The national economy must be promoted on the basis of comparative advantage and, at the same time, competitive advantage based on market mechanism for efficiency and also for providing space for the proper government role aimed at ensuring justice.

        Economic observer Syamsul Amar of the Padang-based State University (UNP), said that the economic formulations and development strategy unveiled by Yudhoyono in his state address should be realized.

        "What was pointed out by the president that the Indonesian economy should not be trapped by global capitalism is the main core of our economic democracy. We appreciate it but it should not exist only as a mere discourse," Syamsul Amar said.

        He said that Indonesian economic system should not be oriented to capitalism. Indonesia needed to develop its own economic system as a core for its economic development.

        "We have to be free from socio-cultural, political and economic colonization. Therefore, the government should not depend on the world capitalism. And to avoid this Indonesia has to develop an economic system which is in line its socio-cultural conditions and potentials," Saymsul Amar said. ***2*** (T.A014/A/HAJM/A/S012) 21:40/..,,,, )

        (T.A014/A/A014/A/S012) 14-08-2009 22:43:09