Aleksius Jemadu, Bandung – Recently, thousands of farmers took to the streets in front of the presidential palace to protest against the enactment of Presidential Regulation No. 36/2005, which allows the government to acquire land for public development projects.

The main impetus behind this regulation is that the government wants to accelerate infrastructure projects funded by foreign investors. The complicated process of land acquisition deters potential investors from financing these projects.

The protesters, however, are not buying this argument. They are afraid that the implementation of such a regulation may lead to arbitrary takeovers of private land in the name of public interest. They are not convinced that the government would be willing to compensate them for the land at a fair and commonly acceptable price.

Is there a win-win solution to these conflicting rationalities? Can the government serve the investors and the poor at the same time?

Over the last few months President Susilo Bambang Yudhoyono has been trying to convince the public that he is quite serious about the idea of promoting good governance. The disclosure of corruption cases in various government offices is clear evidence of government's commitment to save taxpayers' money.

The alliance between the state and foreign investors in the era of economic globalization is a common phenomenon in many developing countries. Without the inflow of foreign capital it is almost impossible to achieve economic growth that is high enough to absorb the rapid increase of new job-seekers.

The logic of capital markets is that they always seeks to eliminate obstacles that hinder them from making profit. On the side of the government, the logic is that economic resources, including capital, have to be controlled in order to consolidate wealth. Hence, we observe an increasing competition among states to attract foreign capital.

On a wider perspective, controversies around the government's new land regulation reflect the uneasy combination of democratic polity and market economy. On the one hand the government has the obligation to attend to public aspirations, but on the other hand the government is forced to pave the way for the operation of capital on the basis of the primacy of economic efficiency.

In advanced democracies, the mechanism of the welfare state can minimize the negative effects of a market economy by giving special allowances to the economically marginalized members of society.

In emerging democracies like Indonesia, the government has a weak bargaining position vis-a-vis the powerful multinationals with the result that the poor tend to be victimized along the process of economic development. Another important damaging effect of the primacy of private capital in the market economy is that it is naturally inclined to destroy the distinctive ethos of public service.

For instance, privatization of water resources inevitably leads to the provision of this utility on the basis of people's ability to pay. It is quite evident that the market economy creates a very undemocratic discrimination against the poor.

It seems that the government has reached a point of no return with its land regulation. It would be a disaster for the government to disappoint foreign investors.

Assuming that those who are against this regulation are mainly concerned with the credibility of government bureaucracies in implementing it, there are a number of bureaucratic measures that the government has to put in place.

First, the government should allow the public to have open access to the mechanism of determining the amount of the compensation given to the original owners of the land that is taken over for development projects. Thus, there is a possibility for civil society organizations to exercise independent control over the collaboration between the government and the private capital.

Second, the government's desperate need for foreign capital can never be a justification for neglecting the poor sections in society whose only asset is their land. In the literature of political economy, the strategy called "growth with equity" can be proposed so that the government can reach the two goals at the same time.

The central government has to convince the public that the implementation of the new land regulation in the regions will be in accordance with the commitment to pay attention to the needs of the poor.

Collaboration between local government officials and private capital is often beyond the control of the local people. Therefore, there should be a guarantee that the central government will not be indifferent to their grievances.

[The writer is the head of the department of international relations at Parahyangan Catholic University in Bandung. He can be reached at aleks@home.unpar.ac.id.]