Alfian, Jakarta – The neoliberal economic policies embraced by the government have created severe structural poverty in the country, an economist said Thursday.

"Susilo Bambang Yudhoyono's administration is obedient to neoliberal economic policies, or the Washington Consensus," economist Rizal Ramli said during a discussion. "Many of the administration's policies have increased poverty and unemployment," he said.

Rizal, former coordinating minister for the economy, said neoliberal influence on the government could be seen in policies that strongly support the interests of foreign capital owners.

"For example in the Oil and Gas Law, Indonesia is only allowed to use a maximum 25 percent of its total gas production," he said.

"That is illogical considering the fact Indonesia is the biggest gas producer in the world. Such a policy has caused energy scarcity in domestic industries. Two big fertilizer factories, ASEAN Aceh Fertilizer and Pupuk Iskandar Muda, have ceased operation due to limited gas supplies."

The Thursday discussion was held by the Indonesia Awake Committee, which Rizal chairs. Those in attendance included Regional Representatives Council (DPD) member Marwan Batubara, actress-turned-politician Rieke Diah Pitaloka from the National Awakening Party (PKB) and chairman of state oil and gas company Pertamina's labor union Abdullah Sodiq.

Abdullah also raised the issue of foreign power in Indonesia's economy. "More than 90 percent of our gas and oil is owned by foreigners," said Abdullah. "The larger portion of revenue from oil and gas is shared with foreign companies."

Abdullah added the current oil and gas trade system had created big losses for Indonesia. "The fertilizer companies in Aceh, for example, had to buy gas from foreign companies," he said. "Previously, all gas was collected and sold by Pertamina."

He also called for a revision of the Oil and Gas Law.

Meanwhile, Rizal said neoliberal ideology had caused trouble in some Latin American countries that adopted Washington economic policies for 30 years, from 1970 to 2000. "The result was they became poorer and gained more foreign debt," he said.

"However, in the last few years the Latin American people have elected leaders who refused to follow Washington's policies, such as Hugo Chavez and Evo Morales. Those leaders said advice from the International Monetary Fund (IMF) and the World Bank was a nightmare for Latin America people."

Ramli also highlighted the government's claim the poverty and unemployment rates had decreased, saying they were merely the result of some modified methodologies in defining poverty and unemployment rates.

"The fact is the number of poor and jobless people has increased, even though the budget to tackle poverty has increased almost three times in the last three years," he said. "Ironically, the poverty rate has increased. This shows poor budget management and an ineffective bureaucracy."

He predicted the poverty level would remain high in 2008 due to increasing food and energy prices. "Life in 2008 will be more difficult for 60 to 70 percent of Indonesians," Rizal said. "Only some 200,000 Indonesians investing in the financial sectors will be happy."