Abdul Khalik, Jakarta – The government should create jobs by building infrastructure facilities at the provincial, regency and village level that can give work to local unemployed people rather than giving them cash, a noted economist has said.
"We notice that regions have many damaged roads, obsolete dams, and other outdated infrastructure," Emil Salim, professor of economics at the University of Indonesia, said on the sidelines of a seminar on globalization in Jakarta.
Such construction work would not only provide jobs for the growing number of the country's unemployed but also help accelerate growth of the local economies, he said.
Emil, who is a former minister for the environment, said that the government had plenty of funds from last year's budget and the current budget, but a larger part of the funds have not been used.
"Aside from the undisbursed funds, there are up to Rp 47 trillion in state funds already given to provincial administrations that have been used to buy Bank Indonesia's promissory notes SBI, rather than being spent on projects," he said.
Emil urged the government to immediately speed up the disbursement of the unused funds because a delay would further worsen the economic situation which would in turn create more unemployment.
According to data from the National Statistics Agency, the number of people living below the poverty line has reached 39 million this year, a 4 million rise compared to the 2005 level.
Indonesia's unemployment rate rose to 10.4 percent in February from 10.3 percent a year earlier even though the economy expanded at the fastest pace in nine years in 2005. The government aims to more than halve the unemployment rate to 5.1 percent by 2009.
Emil said if the government could speed up the disbursement as promised by Finance Minister Sri Mulyani Indrawati recently, it could provide millions of new jobs nationwide.
"The funds are available while we have so many people unemployed. And this is not a complicated things to do. In fact, it is very practical. So, it is a matter of political will to implement it," he said.
Mulyani said Friday in Singapore that the government would accelerate spending on public works needed to spur growth in Southeast Asia's biggest economy.
Although recently the government had unveiled planning to encourage rural and urban communities to determine by themselves the type of development projects they needed, the plan will not be implemented until the second semester of next year.
Some Rp 14 trillion (US$1.5 billion) is allocated in the 2007 budget for the ambitious program, which is expected to improve conditions for the needy in 69,929 villages and subdistricts.
To help alleviate poverty further, he added, the government should push down the price of rice by importing it, stressing that the lower price would not make farmers suffer. "85 percent of poor people's income is spent on food, especially on rice. So, high rice prices make them poorer," he said. That's why, Emil added, the government must lower the price by importing rice.
"But the import policy should take into account the effect on big and small-scale farmers as well as farm workers. The government must create a scheme that can help reduce the negative effect of lower rice prices on the farmers," he said.