Ary Hermawan, Jimbaran, Bali – Indonesia will continue to adopt a society-oriented economic system aimed at guaranteeing an equal distribution of wealth to all citizens but remaining open to globalization, the President says.
"We need to clarify (our stance) once again because there are talks about what kind of economic system would be most suitable for our country in facing globalization," Yudhoyono said while addressing a ceremony marking the 60th National Cooperatives Day here.
"Our founding fathers agreed that the economy we should develop is an economy based on social justice. We choose neither capitalism nor communism. And we will not choose the emerging neo-liberalism, either."
The President agreed the nation is now part of the globalized world and that the government is bound to taking "what is good" from the process and at the same time impede its "adverse impacts". "This is what we need to do," he stressed.
A market-based economy, he said, has proved incapable of bringing social justice and equality to the people, and instead fosters greater disparity between rich and poor. "Meanwhile, communism, in which the government fully controls the economy, has failed to reach the goal it believes it can achieve," he said.
Indonesia enjoyed economic growth of about 7 percent under the New Order administration prior to the 1997-98 Asian financial crisis which badly damaged the country's economy, forcing it to close factories and borrow billions of dollars from international lenders to bail the banking industry out of strife.
"This year, hopefully, we will see a six percent economic growth, which must be equally distributed to all citizens. We must take part in the effort. We will not accept any capitalist-fundamentalist theory that taboos the role of the state," Yudhoyono said, adding that the government would take any measure necessary to ensure economic equality.
This year, the government allocated Rp 60 trillion (US$6.66 billion) in oil subsidies – especially for gasoline and kerosene – and Rp 23 trillion in power subsidies. Foreign companies are still limited in the downstream sectors of the oil and gas industries, while the government is still mulling over the possibility of liberalizing the power sector through the amendment of the 1985 Electrical Power Law.
The government also still subsidizes fertilizer and cooking oil. It recently raised export tariffs on crude palm oil as part of an effort to stabilize cooking oil prices. "These policies are to show that we are implementing an open and equality-based economy," the President said.
He said he hoped the private sectors could take the same line of thinking in developing the economy and that cooperatives could play a greater role in the effort. "Cooperatives should be the solution and crucial element of development for the welfare of the people," he said.
"We must not only maintain their existence, but also develop them," he told some 2,500 cooperative members from throughout the country.
Trade Minister Mari Elka Pangestu, State Minister for Cooperatives and Small and Medium Enterprises Surya Dharma Ali, Indonesian Cooperatives Council chairman Adi Sasono and former state minister for state enterprises Sugiharto also attended the ceremony.