(IPS) feature

Outsiders may still see Indonesia as a teetering house of cards, but President Megawati Sukarnoputri may yet be this South-east Asian country's ace for the future — at least in terms of the goodwill she manages to generate from various sectors.

Despite her perceived lack of political skills and acumen, Megawati, who became Indonesia's chief executive just a few months ago, continues to enjoy the confidence of many major political and social organisations.

But some Indonesians say they are waiting for the last political change in this country of more than 200 million people to translate into better economic times as well — and have high expectations of the Megawati government in the coming year.

''The government was doing good enough in politics and social sector, but not in the economy,'' says Melly Sumarni, a 33-year-old government employee from Palembang, South Sumatra in western Indonesia.

''There was no longer big rioting or wide-scale violence. But we were no better then before in term of economy. I hope there will be some improvements this year,'' she adds.

But some analysts say that Megawati is gambling away the goodwill she has garnered by following the wishes of the International Monetary Fund (IMF), World Bank and donor countries.

And that, they say, may mean another round of turbulence ahead for this conflict-ridden country.

Heavier financial burden

Among other things, the IMF and the World Bank have asked the Indonesian government to lift subsidies on fuel, electricity and food in order to generate state revenues.

But that puts a heavier financial burden on ordinary Indonesians, who may not take the additional weight sitting down and take to the streets once more.

Thirty-six year-old Mused Burhanuddin, a worker in a private company in Jakarta, says: "Things seem to be the same in the economy. All sectors collapse. There is no encouraging developments.''

''We have been in this crisis for four years and we have not made any achievement. If things continue as they are, it would be horrible. Well, we are getting accustomed to hardship, but we just cannot go on this way,'' he argues.

At present, at least 36 million Indonesians are jobless. Even with a rosy political outlook, Indonesia would still see unemployment numbers climb by early this year because of US import restrictions on Indonesian goods put up in the wake of the Sept 11 events.

Lower economic growth

Legislator Antony Zainal Abidin also says poor foreign investment would pull down the country's economic growth next year from five percent to 3.5 percent.

To be sure, Indonesia has no choice but to comply with the ''suggestions'' of the IMF and the World Bank, being a recipient of loans from these institutions.

Yet even though Economic Minister Kwik Kian Gie says Jakarta ''has no other way'' to take, he admits, ''suggestions from the IMF and the World Bank have put heavier burden on the Indonesian people''.

Abidin observes, ''The government is in a big dilemma. Following the IMF and World Bank guidance will mean abandoning the people. But developing a people-based economy will displease its donors and it will not get funds to set its economic wheels in motion.''

Indonesia has already signed a Letter of Intent with the IMF that says Jakarta will follow the Fund's guidance in the economic recovery efforts.

Aside from suggesting a lifting of subsidies on various commodities, the Fund also wants Jakarta to sell state-owned companies and restructure the banking sector. Under this plan, proceeds from the sale of national assets and state enterprises would be used to pay the country's mounting foreign debts.

Unable to finance programmes

As it is, the central government is already unable to finance its national programmes because of a budget deficit. Many are even wondering whether or not Jakarta has the money to pay the wages of state employees.

So far, the privatisation measure has already encountered resistancefrom local governments, which have accused Jakarta of simply transferring ownership of state companies from the central government to foreign investors.

Despite Economics Minister Kwik Kian Gie's comments that Jakarta knows how IMF reforms put burdens on ordinary people, HS Dillon of the Centre for Agricultural Policy Studies says: ''The government and the IMF just don't learn that poverty in Indonesia is a structural problem.''

''It is a problem of unjust land ownership, production, the standard of human resources, access to credit. So what we are supposed to do to resolve poverty is to change these structures,'' he adds. ''But what comes to their heads are privatisation, lifting of subsidies, liberalising trade. They will surely turn things from bad to worse.''

But it is the lifting of subsidies, especially on fuel and electricity, that is upsetting most Indonesians because it will lead to higher prices.

Analysts themselves say this would only further weaken the people's purchasing power and prolong social and political instability. They predict that inflation next year would reach two digits due to the soaring prices. Abidin foresees an inflation rate of 10 percent.

Producers in despair

The Indonesian government is also under pressure to scrap trade barriers and reduce import duties on food imports. Cheap foreign food products are flooding local markets, leaving domestic producers in utter despair.

''I grow red pepper and it was harvested last week,'' says Farid Maulana. ''But I haven't sold them to market because the price is not good. People prefer to purchase imported chili, the quality is better and the price is cheaper.''

Maulana says he has lost interest in farming. ''I don't know what to grow,'' he grumbles. ''Any plant I grow, the yield will not be profitable because we cannot sell them at lower prices of imported ones.''

''Starting this year, I will quit farming and become a construction worker,'' says Maulana, adding that farmers like him in his hometown in West Java have already sold their lands to nearby textile factories.

Dillon says some of Jakarta's policies are contradictory. ''The government in cooperation with the IMF provides cheap rice. But at the same time, the IMF recommends simultaneous scrapping of import duties and othertrade barriers. It causes foreign food products to flow in at low prices and our farmers can do nothing about it,'' he explains.

People-based economy

Economist Revrisond Basir says that by signing the Letter of Intent, Jakarta deviated from Indonesia's constitution, which puts emphasis on a people-based economy.

''The 2002 state budget is very much market-oriented, whereas even in a liberal country like the United States, there are still restrictions to protect its people,'' he says. ''The IMF has forced Indonesian government to do that.''

Basir, however, is apparently still a believer in Megawati, daughter of Indonesia's first president, and says that her government still has the potential to get Indonesia out of its rut.

''I think Megawati's government is in serious attempt to fight corruption, despite big challenges,'' he insists. ''If Indonesia (succeeds in having) a cleaner government this year, there are signs of better situation in the near future.''

Many do agree that at least social and political conflicts have subsided since Megawati came to power, thanks in part to the fact that her Indonesian Democratic Party holds a majority of the seats in Parliament.

Says Abidin: ''If this trend can be maintained and improved into social and political stability, there is light at the end of the tunnel.''