by Jennie S. Bev
A recent presentation of Indonesia's 2007 fourth quarter macroeconomic and reform progress by Dorodjatun Kuntjoro-Jakti, the former coordinating minister of economic affairs and the former ambassador of Indonesia to the United States, in San Francisco brought to light a promising outlook for economic recovery.
With current GDP growth of 6.3 percent, controllable inflation of around 6 percent and a credit rating of BB+ with a spread of 200 basis point, the macroeconomic picture is hopeful.
He also said that the foreign investment climate is looking rosy in 2008 and 2009 with forecasted GDP of more than 7 percent. Indonesia is ready to rise up once again, to stand among the top players in world economics in the next two years, as a result of so many contrarians and private equities that have chosen to invest long term. He even proudly added that almost all banks in Indonesia had been acquired by foreign entities, except for Bank Mega.
These figures, however, are in contradiction with another figure, which was neither discussed nor presented, of which the poverty rate has increased from 16 percent in 2005 to 17.8 percent in 2006. According to World Bank data in early 2007, the number of poor is not merely 39.1 million as calculated by the Central Bureau of Statistics (BPS), but it is half of the total population of Indonesia, which is a whopping 110 million people.
Such a mind-boggling phenomenon requires serious attention as it raises serious questions.
First, why doesn't such a huge amount of foreign investments, of which a large percentage are private equities (private to public or P2P), decrease the poverty rate? Second, with such paradoxical figures, is gross domestic product the appropriate measurement of a healthy nation, economically (and politically)? How about gross national happiness (GNH)?
Discrepancies in wealth distribution are obvious. While the number of Indonesian residents on the Forbes' list of richest individuals has increased considerably, the divide between the rich and the poor has also widened. Many of the rich apparently are enjoying top dollars by exporting palm oil products, while a peek at the grass root level can easily reveal how homelessness and near starvation are epidemic throughout Indonesia.
Rural residents have been living below acceptable health and sanitary standards. Many residents of disaster-stricken regions, be they natural or caused by man, such as the 2006 Yogyakarta earthquake and the Sidoarjo Lapindo mud victims, are having problems re-building their lives. They have been living with minimal resources, financially, physically and psychologically. Such people are often forgotten and only belong to statistics, if they are lucky enough to be counted.
The issue of the widening wealth divide is much more than about unemployment and poor deliverance of governmental assistance. It is a tangled web of various issues, including but not limited to corruption, unreliability of telecommunication accesses, inefficient transportation and limited opportunities to excel one's self. And the key to eradicate, or merely to reduce the poverty level, is the political will of Indonesian politicians, which relies greatly on their conscience, sense of humanity and, above all, sense of urgency and dignity.
GDP is apparently the poster child used by most economists and politicians. There is no doubt about that. It is relatively simple to measure and to convey to the public. However, Johannes Hirata, PhD, an economic scholar and researcher at University of St. Gallen (Switzerland), argued that it is popular probably because such figures give an illusion of precision and lend themselves to exact quantitative analysis.
"Apparently, people prefer being precisely wrong to being approximately right. The logical alternative is to look for other criteria or principles of development that are more to the point, even if less precise," he said. His dissertation is titled Happiness, Ethics, and Economics, which utilizes a multidisciplinary approach in addition to economic analyses.
While GDP and gross national product are based on a rigid quantitative approach, GNH adopts both quantitative and qualitative approaches, which provide a holistic perspective. A good balance of mind and heart approaches, I must say.
The term GNH itself was coined by Bhutan's King Jigme Singye Wangchuck in 1972. He used this concept to unify the country's development planning that guided economic and development plans.
There are four pillars in this easy-to-state-but-hard-to-define concept: the promotion of equitable and sustainable socio-economic development, preservation and promotion of cultural values, conservation of natural development, and establishment of good governance.
The four pillars require in-depth analyses of qualitative variables that include how politicians execute development plans and the political climate and stability. This alone is quite challenging to measure in Indonesia due to diverse political affiliations, social stratifications, geographical obstacles and spectrums of the dominant religion.
According to the New York Times database, there are four spectrums of Islamic followers: 50 to 60 percent moderate pluralists, 30 to 40 percent conservative fundamentalists, 10 percent radical fundamentalists and 1 percent extreme fundamentalists.
Still, the good faith to measure overall Indonesian residents' happiness is the key to understanding how well the increased GDP has played a role at all levels, including those who belong to the lower part of the pyramid. By "happiness,” Hirata refers to a concept that can be looked at from a number of angles.
One of the most suitable angles is the interest as it relates to the question of societal development. It is not about hedonistic or euphoric momentary happiness, but long-term peace of mind from knowing that most, if not all, basic and intermediate necessities are available and affordable financially, physically and psychologically.
At last, Indonesia can stand tall with dignified deeds, not just the thoughts and rhetoric of politicians. For this, they need to be dignified as well. After all, dignity is priced much higher than millions of dollars. When dignity presents itself, corrupt intentions shall subside. Aren't there any dignified politicians out there?
The Jakarta Post, November 12, 2007