Prabowo Will Not Be Economically Radical: Spokesman Sandiaga Uno

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Prabowo Will Not Be Economically Radical: Spokesman Sandiaga Uno

By Shoeb K. Zainuddin on 04:36 pm Jun 06, 2014
Category Business, Economy, Featured
Tags: Indonesian economy, Prabowo Subianto


Jakarta. In early 1999, when former President B.J. Habibie was seeking to have his accountability speech accepted by the People’s Consultative Assembly, or MPR, the concept of a “People’s Economy” first surfaced and was widely debated amongst policy wonks.

Since then, however, the concept has faded into the background, although some of its important points were incorporated into the economic policies of both President Megawati Sukarnoputri and President Susilo Bambang Yudhoyono. The idea of the concept is to drive economic growth by focusing on improving the economic well being of the people, especially those on the lower rungs of economic ladder.

As the final stages of the 2014 presidential election draw near, the term is back in the headlines and the lexicon of economic thinking. But what exactly does the term “People’s Economy” mean and what policies will encapsulate it?

Presidential hopeful Prabowo Subianto from the Great Indonesian Movement Party (Gerindra) has promised to unleash the people’s economy if he is elected to the highest office in the land in July.

According to Sandiaga Uno, recently appointed as a spokesman for the Prabowo campaign, the unleashing of the people’s economy will be a game changer for the nation.

The people’s economy will mean empowering 55 million small entrepreneurs in the country, said Sandiaga, who is the co-founder of Saratoga Capital, one of the biggest private equity firms in the country.

“We have to re-orientate our thinking in terms of building our economy by including this 55 million disenfranchised group of mini entrepreneurs,” he said in an interview on Thursday night.

Sandiaga has been a leading advocate of promoting entrepreneurship as a means of reducing poverty and fostering economic growth. He has in the past served as chairman of the Indonesian Young Entrepreneurs Association (Hipmi) and also serves on the board of the Indonesian Chamber of Commerce and Industry (Kadin).

But are the labels people’s economy and economic nationalism, which have been associated with the Prabowo economic doctrine, just double speak for keeping foreigners out and maintaining a tight control over Indonesia’s rich natural resources?

“In order to power economic growth, you need investments, build infrastructure, and develop processing industries,” Sandiaga said. “We cannot do all this ourselves so we will have to attract both foreign and domestic private sector players.”

The term resource nationalism, he added, has been misinterpreted and misunderstood because Prabowo does not intend to nationalize the economy.

“We have to be smart and careful about how we develop the economy especially with the Asean Economic Community just around the corner,” Sandiaga said. “We should not just be a market for other countries and a supplier of cheap raw materials.”

After a decade under Yudhoyono’s presidency and 16 years since the fall of the New Order, Indonesia is a different country. A reinvigorated civil society and a free press will ensure that those in power cannot make a grab for the country’s economic assets.

Sandiaga said that transparency and equal treatment will be at the heart of the new people’s economy. This means that all entities will be given an equal chance to manage natural resources, which would include ensuring that companies and corporations pay their share of taxes and royalties as stipulated by the law. As such, ownership is not really the main issue, rather the management of the country’s vast natural resources.

“We have to be competitive. We cannot simply make our own rules,” Sandiaga said. “Where I will play a role is to give comfort to players that all these political statements mean well and we will not be radical in our economic policies.”

Prabowo, Sandiaga added, has a very strong and firm idea on the economic model he will pursue and the make-up of his economic team if he is elected president. “He even knows who he will approach from the other side to join him, which makes him unique.”

In terms of drilling down on some key economic policies Prabowo will implement, if elected, Sandiaga noted that Prabowo would continue the current government’s Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI). The plan calls for the establishment of seven economic corridors based on the potential and competitive advantage of individual regions in the country.

“What has stifled progress has been land issues and the lack of political will,” Sandiaga said. “Prabowo will be decisive and tough in implementing the program but within the corridor of the law.”

Currently, the business executive added, there is no urgency and sense of crisis within the government and the bureaucracy to speed up the implementation of the MP3EI.

Another issue Prabowo will tackle within the first 100 days is the fuel subsidy. According to Sandiaga, Prabowo wants to replace the fuel subsidy with direct cash transfers to the poor, a policy also used by the Yudhoyono government. Indonesia, however, is not ready to go all the way and adopt global market prices.

While these plans sound good on paper, Fauzi Ichsan, a noted economist who is advising Joko Widodo, the other presidential candidate, on his own economic platform, said that whoever was elected president of Indonesia on July 9 would face the stark reality of limited options. The country is facing a fiscal crisis, forcing the government to slash Rp 100 trillion ($8.4 billion) from its budget.

The main reason for the ballooning fiscal deficit is the nearly Rp 300 trillion the government is spending on fuel subsidies, leaving little money to fund development projects.

“If you are running a fiscal deficit and a current account deficit, your priority must be consolidation, not expansion.” Fauzi said. “The government’s ability to spend heavily will be restrained and if you are not willing to talk about fiscal consolidation, that is worrisome.”

Ultimately, Sandiaga said, Indonesia must strike a balance between pure capitalism and a controlled economy. The country cannot afford to be ultra-nationalistic if it wants to build infrastructure by attracting foreign capital. Indonesia also needs expertise and technology from abroad if it is to lift its small entrepreneurs.