Ain't no angel

Some economists, who are also commissioners in major companies, have been rallying behind SBY-Boediono. They're also die-hard defenders of the so-called Boedionomics (this is way too much of a compliment) to counter the neoliberal term labelled by SBY's opponents on Boediono. They are Chatib Basri, commissioner of Indika Energy, and Raden Pardede, commissioner of Bank Central Asia (BCA) controlled by Djarum Group. Chatib is also special staff for finance minister Sri Mulyani Indrawati, while Pardede was deputy president director of the state-owned PT Perusahaan Pengelola Aset (PPA). 

We're not going to enter into the debate of the neoliberal label or the Boedionomics. We care more about Boediono's track record, including his recent job as central bank governor. During his relatively short tenure we have confronted with Bank Century scandal which cost the State about Rp6.2 trillion. In his period we also watched the Tripanca Bank scandal in Lampung where the owner managed to embezzle over Rp2.7 trillion of funds.

For sure, nobody at the central bank held for accountability in the scandals. Just like how billions of USD injected to bailout the state-banks in late 90s and early 2000s. We haven't heard how Boediono as the governor of central bank took actions when it comes to central bank officers who supposedly supervise the banks. This is important for public to know how decisive he would be as VP when it comes to people around him.

We have to admit that Boediono is a cool, simple, and smart (although we don't agree with SBY-Boediono's spokesperson Rizal Mallarangeng who claimed Boediono is lot smarter than Kwik Kian Gie). But public need to know that Boediono ain't no angel as portrayed by some of his supporters. He also committed wrongdoings, and at certain point played his part in the costly banking recapitalization program in late 90s.

As for SBY-Boediono economists, they spent so much time to criticize the double digit economic growth target tipped by Megawati-Prabowo. Most of them called the double-digit growth target unrealistic. The term "unrealistic" is clearly not a good news for those expecting Boediono, who is an economist, could boost the growth. We initially thought with Boediono as VP he could take the country to a new and sustainable double-digit growth. Why not? Some countries managed to achieve that. Why can't we? Doubts for something ambitious and high target is a mental block in itself for higher growth.

The doubts on double digit growth is more of a mental problem which has proven the main reason why Indonesia collected few gold medals in Olympics. Because when someone said "I could make it 8 seconds for 100 meters", Indonesians would say..."that's unrealistic. We can make it 12 seconds..." only to see athlete from other countries broke 7.9 seconds record. 

Pardede said there is no people's economy. Only two school of thoughts...marxism and liberalism...Indonesia is in between...Well, this is just textbook thinking. Let's just define people's economy as an economic model that could ensure the State delivers all its promises under the Constitution...For example, one of the 1945 Constitution dictates...the poor and neglected children should be taken care by the State." We shall think seriously how we draft policies to make sure that the State takes care the poor and neglected kids. For example, we have to raise income tax for the haves. We have to identify whether they pay their taxes properly. Shall we build more sheltering homes for the poor? Shall we provide blankets? Shall we give scholarships for the neglected kids? For how long?

So, instead of spending so much energy in debating who's neoliberal, socialists, or marxists, try to find the best possible answer to those questions. Because SBY, Boediono, Kalla, Wiranto, Megawati, and Prabowo are not angels.

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SOEs officers in politics

It is easy to talk. Last year, state-owned enterprises ministry issued a regulation that forbids member of board of commissioners, directors, and civil servants from active participation in political campaign for a certain president candidate. In reality? Well, Sutanto, former National Police Chief and president commissioner of state-owned Pertamina, is an active leader of Pro SBY Movement. By law, it's a crime. BUT....

Sutanto is member of advisory board of Gerakan Pro SBY or Pro SBY Movement with Suratto Siswodihardjo as chairman. Suratto is also executive of SBY's Demokrat Party, and since 2006 has served as commissioner of state-owned airport management company PT Angkasa Pura II. Well, at least according to the company's website, Suratto is still listed as commissioner.

Muhayat, deputy minister for state-owned enterprises, is also chairman of Barisan Indonesia (Barindo) which has declared its nationwide support for SBY's reelection. Muhayat is also vice president commissioner of state-bank Mandiri.

Andi Arif, commissioner of PT Pos Indonesia, is also secretary general of Jaringan Nusantara (JN) which is campaigning for SBY. Akhmad Syakhroza, commissioner of state-owned toll road developer PT Jasa Marga Tbk, is also the chairman of expert council at Demokrat Party.

What the law says?

Law No. 42/2008 about presidential election stipulates clearly in the Article 41 point 2.d. that campaign teams are not allowed to bring into the campaign activities all the officers of state-owned enterprises. Point 3 of the same article also forbids the SOEs officers become campaign team members. Article 44 of the Law No. 42 also forbids SOEs officers from conducting activities (meetings, suggestions, etc) that clearly support one of candidates. Violation to all of these articles are considered election crimes. SOEs minister Sofyan Djalil had actually issued a circular to implement these articles.

The question, once again, can they implement that consistently?

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The Dream of a Welfare State

Only 400 rich individuals paid more than US$500,000/year of income tax in Indonesia and around 1500 paid above US$200,000/year. The numbers have surprised many especially because some bankers predicted there are at least 30,000 Indonesians categorized as super-rich individuals.

National Ombudsman Commission (KON) believes number of rich Indonesians is way above 2,000 listed as biggest individual taxpayers with payment over US$200,000/year. Why? There are several possibilities:

1) Tax Office is not aggressive enough in hunting down the rich or if they do, they might have been collaborated in paying less tax than they should.

2) Poor registration of shareholders or records about dividend payments.

3) The riches have transfered the benefits overseas to escape from tax payments.

4) The riches have been "taxed" by politicians where they recorded as "expenses".

5) Repatriation of dividends to shell companies controlled by Indonesians in BVI, Mauritius, Solomon Islands etc.

Hopefully tax office could get higher payments from the rich and get more rich individuals to pay tax properly. It needs good recording system/database about the richest people.

Tax is the most powerful instrument for the State to implement Constitution. Indonesia's Constitution is actually written with social democratic flavors to create a welfare state. Article 28 of 1945 Constitution for example clearly stated...the poor and neglected child should be taken care of by the State. How to implement that? The State should generate more money from tax and other incomes.

But if we ask political parties what will they do on tax if they're in power? All of them would come up with somewhat similar answer. So, don't expect Golkar, PDI-P, Democrat Party, PKS, PPP, PAN, PKB, Gerindra, or Hanura could give you an answer that clearly differentiate one of them.

Ask potential president candidates like the incumbent president SBY, former president Megawati, or people like Amien Rais, Gus Dur, Wiranto, Sultan Hamengku Buwono or Sutiyoso, Sutrisno Bachir, Rizal Mallarangeng about their tax policies, you would likely get similar answers. Don't expect them to come up with detail programs like what Barrack Obama offers in his campaign for US presidency: higher tax for the rich, lower tax for workers and low-income group.

OK, forget about progressive tax rate like what has been applied in countries claimed themselves as "welfare states" where the top group should pay up to 57% while lower-income group with 15% only where the money used to finance social expenses like healthcare subsidy, lower education costs, etc.

But Indonesia could start with better database to chase the rich individuals, especially family members of the family business groups, politicians, executives in public and private sectors, judges, auditors, consultants, experts/commissioners, writers, artists, musicians, etc. We believe we could easily get the list of 50,000 wealthy Indonesians.

According to a recent data, personal income tax payment reached only Rp31 trillion while corporate income tax reached Rp161 trillion or one fifth. In other countries, the gap between personal and corporate income tax payments is pretty small.

Indonesia do implement higher stamp duty on luxury cars. But may be government should raise them again. And other luxury items or houses/apartments. Luxury tax for cars could reach as high as 75% while luxury apartments and houses at 20%. This should be amended let say for luxury apartments with price tag above US$250,000, luxury tax will be 75%. It's not fair to tax luxury cars with the price tag of US$100,000 at 75% while apartment with price tag above US$100,000 only 20%, right?

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Abuse of public space

Economist Faisal Basri concluded SBY-Kalla failed to deliver most of their 2004 campaign promises. SBY's claim of success is considered an "empty jargon". Unfortunately, Kompas published the article in 15th page, not in front page. Meanwhile Independent Journalist Association (AJI) suspected "media owners' intervention" for full-23 minutes of SBY's speech aired by TV stations on April 16.

Economist Faisal Basri concluded SBY-Kalla failed to deliver most of their 2004 campaign promises. SBY's claim of success is considered an "empty jargon". Unfortunately, Kompas published the article in 15th page, not in front page. Meanwhile Independent Journalist Association (AJI) suspected "media owners' intervention" for full-23 minutes of SBY's speech aired by TV stations on April 16.

Basri pointed to the failures of SBY-Kalla in meeting most of macro-economic targets for 2004-2009 in economic growth, unemployment level, poverty rate, tax ratio, and economic disparity. We're not going to discuss the missed targets, because we've already argued similarly in our previous articles. We're more interested in the placement of the article by Kompas in Page 15.

Those who are familiar with media politics know exactly different magnitude of articles published in front page and page 15. Why Kompas published the critical article in page 15 is something to do with the newspaper's political standings.

Bisnis Indonesia, interestingly, published in front page today an article from political observer Yudi Latif who basically said that it is too early to claim a victory (for SBY) and too early to concede (for SBY's competitors).

In the meantime, a letter to editors sent by Wahyu Dhyatmika, chairman of Jakarta Chapter of AJI, deserved attention, especially for the future of Indonesian democracy. Dhyatmika criticized Indonesian media, especially TV stations, for a full-23 minutes of SBY's speech aired on April 16, 2009.

Dhyatmika said verification by AJI Jakarta found strong indication of pressures from TV owners on the board of editors to air in full SBY's speech defending his innocence in the election flaws and frauds alleged by several political parties.

AJI urges Indonesian Broadcasting Commission (KPI) to investigate the alleged intervention. "Based on Broadcasting Law, KPI is obliged to assure that public spaces (frequency) are not abused for certain group's interests," AJI argued.

Well, the issue of public space in broadcasting has been the subject of debates in most advanced democracies for many decades now. Historically, political debates used to take place in political parties, rostrums, or the parliament. But with the growth of mass media, the public space has changed from bars, squares, and clubs to TV or Internet.

Face-to-face contact is replaced by other ways of communication, which sometimes better (they could reach more people) and worse (because of one-way communication, personal relationships between politicians and the mass are weakened).

Like in other democracies, there are cases of excessive abuse of public spaces, especially in TV broadcasting, by its owners for certain political or business interests. Soeharto regime is known for editorial intervention through minister of information where editors were asked not to publish something. In the West, media magnate Rupert Murdoch is known for such editorial intervention.

After Soeharto's downfall, Indonesian media gained its "freedom", but only from the authoritarian ruler, not from the owners. As a matter of fact, intervention from media owners have increased significantly in the past few years, mainly for "business interest", i.e. to maintain the big spenders (advertisement) or "political protection" from the ruling elite.

So, we're not surprised to read AJI's complaints of editorial intervention by television media owners. We have at least 11 national TV stations which "control" the public frequencies.

1) TVRI: State-owned TV station. Even though government promised to give "freedom", this TV station is pretty much controlled by government.

2) RCTI, TPI, MNC TV, Global TV: Controlled by PT Media Nusantara Citra (MNCN) Tbk, a listed company. MNCN is controlled by Bhakti Group (Tanoesoedibjo family). This is the largest TV broadcasting group. The group's interest varies from stock trading to property and manufacturing.

3) SCTV & O-Channel: Controlled by PT Surya Citra Media (SCMA) Tbk, a listed company at Indonesia Stock Exchange (IDX). SCMA is controlled by EMTEK Group (Sariaatmadja family), which has interests in other businesses, including the supply of IT for state-owned banks. Fofo Sariaatmadja is seen in various occasions on board with president SBY.

4) Indosiar: Controlled by Salim Group, one of Indonesia's biggest conglomerations with interests in manufacturing, property, finance, etc.

5) Trans TV & Trans-7: These stations are controlled by Para Group (Chaerul Tandjung), which also has interests in banking, finance, property, etc. Tandjung is a business partner of Kalla Group (controlled by VP Kalla, now a president candidate). Tandjung is also known as business partner of Salim Group. But Tanjung played crucial role in brokering PKS-Demokrat dispute on VP for SBY.

6) ANTV and TV-One: Controlled by Vivanews Group (Bakrie family), which has interests in mining, oil and gas, property, infrastructure, etc. Aburizal Bakrie, leader of the group, is a cabinet minister, close to both Kalla and SBY.

7) Metro-TV: Controlled by Media Group (Surya Paloh) with interests in media, mining, property, and energy sector. Paloh is also the chairman of Golkar Party's advisory board.

With the recent political developments, the break-up of SBY-Kalla, intensified pressures on government in relation to election laws and frauds, it is interesting to see with whom the media owners will aligning to. And, since these media owners have various business interests, it's just so easy for them to "intervene" the board of editors for the sake of "protection" of their own interests. They actually don't care whether the frequency awarded to them is public goods or not. They would easily call their own interest as public interest.

This article is taken from Yosefardi.com.

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Privatization: No to SOEs, yes to education?

President SBY punched his fists hard to the podium when he expressed his disagreement with "selling-off State assets" to foreign investors. "We don't need to sell State assets to finance the development," SBY said adding that his administration never sold State assets. Damn right! No divestment of state-owned enterprises during his tenure. But we sold 10,000 MW program to China. Oops, the most important thing: PRIVATIZATION OF EDUCATION!

SBY's definition of State asset is just too narrow if he talked about privatization or divestment of state-owned enterprises (SOEs). He should have talked SOEs as State liabilities TOO. He should have talked SOEs as the breeding ground of corruption, collusion, and nepotism UNTIL NOW. If he talked about future welfare of Indonesians, he should also took comparative data from other advanced nations: which country of wealthiest society in the world that has so many state-owned companies like Indonesia?

"If we keep selling off (State assets), how about our children and grandchildren?" SBY argued. But he didn't provide strong argument behind that: what is the relationship of having SOEs and welfare of a nation? What is the relationship between having over 200 SOEs during Soeharto years and people's welfare?

Well, since SBY said so in a non-academic forum, let's just consider that as politic rhetoric ahead of April 9 election and his re-election campaign.

Why he paid more attention to divestment or privatization of SOEs? How about the privatization of education in the past few years that cost most parents dearly?

Let's rephrase the following letter from parents in Tangerang, Banten province:

"I just got my son enrolled at State Junior High School II Ciasuk, Tangerang. The school asked for Rp3.5 million for Education Contribution Fund (DSP). But because the school was constructing a new building, they asked for an additional of Rp1 million contribution. I had to pay uniform and books for Rp800,000, with tuition of Rp135,000 per month. The school committee argued no funds from local and central governments and that the so-called BOS (School Operational Assistance) is not clear and only Rp200 million per year or Rp26,000 per student."

"My son was categorized as a smart student, so the school offered him to enroll in the bilingual class with additional tuition of Rp260,000. After he passed the test, the school summoned the parents and they were asked to contribute Rp2 million. Tuition fees were raised to Rp280,000. The school said the bilingual class is education department's program where some schools are forced to establish such classes, but it's weird that the students should bear all the expenses. The school asked for additional contribution of Rp2 million for the purchase of AC, overhead projector, laptop, tables, chairs, and to pay the teachers. The school committee didn't really care whether we could afford or not."

"I really don't understand what kind of tricks the education practitioners committed in this country. Where is the claim of 20% State budget for education? If public schools turn out to be the same cost with private schools, where is the State? Even the wealthiest nation in the world won't do this."

With US$500 to enter a public school, can you imagine how the children of workers with US$100 salary could get good education?

Kompas quoted Satmoko, a textile factory worker with US$90 per month salary, complaining how his son failed to enter a public school because the school set the "tariff" for "contribution" at US$150 minimum. Satmoko asked the headmaster why the "contribution" was so high? He got the answer that the school wanted to purchase a parcel of land for Rp1 billion or about US$100,000.

My university tuition cost was US$12.5 a year back in late 80s.
This article is taken from Yosefardi.com

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Fight against Inequality

Will vote for someone who fights for trimming down huge economic disparity and inequality, the gap between the haves and the poor....which increased significantly in the past ten years, in contrast to the mandate of reform movement. We brought down Soeharto because, among others, of huge inequality in the society. What've been done? We've seen the rich getting richer, the poor poorer. Someone shall come up with serious measures to narrow down the gap.

In 1998-1999, Indonesian people spent Rp770 trillion to bailout thousands of companies, including major business groups like Salim, Sinarmas, Barito, Bakrie, Nursalim, Texmaco, Rajawali, RGM, etc. The State, all of us, still bear the cost of the bailout until now, and another 10 years or so due to the banking recapitalization. What's happened to these groups post Soeharto-Habibie's massive bailout?

Bumi Resources, one of Bakrie-controlled company, reported net profit of Rp19 trillion in the period of 2004-2008. SMART, one of Sinarmas subsidiaries, reported Rp2.97 trillion of net profit in the period of 2005-2008. Indofood, one of Salim's subsidiaries, reported net profit of Rp3.18 trillion in 2004-2008. BCA, currently controlled by Djarum Group and Farallon, booked net profit of Rp19 trillion in 2005-2008 alone. The State bailed out BCA with Rp56 trillion of recapitalization bonds, where each year the taxpayers shall pay its interest of at least Rp6 trillion. 

Indonesia's major groups control more and more concessions. Most of them control over 200,000 Ha of plantations. They also controls over 50,000 Ha of coal concessions on average. 

So, when government and its economists claimed 5% economic growth, the big question: who's grown, who's left behind? Economic growth is aggregate growth of 237 million people. The super rich (0.01% of population) controls over 70% of the growth. According to central bank data, only 25,316 accounts with over Rp5 billion in Indonesian banking system which accounted to 35% of total funds, while those with over Rp100 million (1.7 million accounts) control about 43% funds. Do the math! A 5% aggregate growth, for example, could be reached with 15% growth in the super rich (25,300 accounts) while the other groups 0% or a 20% growth in the super rich while others declined. So, don't be fooled by aggregate growth measures!

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Contrast between SBY-Boediono and Megawati-Prabowo

What's the big difference between declaration of SBY-Boediono in Bandung and Megawati-Prabowo in Teuku Umar, Jakarta?

1) Extravagant vs modest: SBY-Boediono spent billions of rupiah of ceremony at the elite university in Bandung, while Megawati-Prabowo did in a modest way last night at the compound of Megawati's residence at Teuku Umar. SBY-Boediono hired four top, high-pay, announcers, Megawati-Prabowo only had Pramono Anung, PDI-P secretary general, as announcer.

2) Rich crowd vs ordinary supporters: Lots of Indonesian richest people flocked in Bandung, hundreds of supporters at Teuku Umar. 

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Tough Race, Hopefully

So, we finally have a race. Incumbent president SBY will face two contenders: former partner Jusuf Kalla and former boss Megawati Soekarnoputri. SBY have Boediono as running mate, Kalla with Wiranto, and Megawati with Prabowo Subianto.

A two-round election is a possibility. Some of SBY's voters have started to jump ship because of his overconfidence, his treatment to coalition members, election flaws, and worries about reemergence of authoritarian style of leadership. There is no guarantee that SBY would win the election. Things could change.

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Coalitions without Visions

Demokrat Party and President SBY insisted that Boediono is the best choice for VP candidate. PKS, PAN, PPP threatens to leave Demokrat-led coalition. Megawati's PDI-P might ink a coalition with Prabowo Subianto's Gerindra for the sake of "good race". Kalla's Golkar and Wiranto's Hanura are welcoming parties leaving SBY. Three-way race is wide open. But can they move to the next level, talking about visions? 

SBY-Boediono

- The decision might show a high self confidence in SBY that he could win the election regardless of his choice of running mate. 

- SBY opts for personal relationship with his VP than coalition in the House of Representatives (DPR). Without PDI-P and Golkar in the coalition, SBY might face a strong opposition in DPR.

- SBY believes Java-non-Java typology is not an issue anymore among voters, especially those outside Java. 

- SBY believes Nationalist-Islam typology is not an issue anymore for voters. Boediono is considered a nationalist-secular like SBY.

- SBY opts not to feed a "lion" (VP from political party) which may kill Demokrat in 2014 when SBY can't enter the race anymore.

- Protest from PKS, PAN, and PPP might be settled with more seats for them in the next cabinet, especially if PDI-P will not join the coalition. Without better compensation, one or two would leave SBY and join other coalitions, including PKS plan to move to Kalla-Wiranto or PAN-PPP which may support Prabowo. But PAN and PPP might opt to stay if Prabowo decides to take VP post with Megawati instead.

Megawati-Prabowo

- This is going to be a confirmation that Megawati opts to save the party's integrity than short-term political gain, i.e. getting seven to nine cabinet posts if joins SBY. 

- They might loose the race, but the race would be more interesting than a two-way race between SBY-Boediono and Kalla-Wiranto.

- If they fail, PDI-P and Gerindra will become opposition in the parliament, something the country needs to check and balance a strong administration. 

Kalla-Wiranto

- They might be able to accommodate parties like PKS or PPP. 

- If they fail, some of Golkar leaders rejoin SBY's coalition, just like what's happened in 2004. There is a possibility that some Golkar cadres will be appointed ministers. 

- If there is a second round, Kalla-Wiranto supporters might be directed to vote for SBY's opponent in second round. If they enter the second round, Megawati-Prabowo fails, they might get additional support from Megawati-Prabowo voters.

- If both Kalla-Wiranto and Megawati-Prabowo fail in the election and that there is no second round, there are possibilities that some Golkar leaders rejoin Demokrat, leaving PDI-P, Gerindra, and Hanura as oppositions. 

Without Visions

So much energy has been spent in talking about who's who in the past few months, focused on the president and vice president. Once the issue settled, in the next two days when the final registration closed on May 16, the elites will start to talk about cabinet posts, i.e. who will get how much and which post. Discussion about that might alive until October 2009, leaving only few hours of serious discussion about what these leaders would and could do.

That's not surprising at all, especially because these political parties have been established without clear visions, platforms, and directions. These parties were established on weak ideological background. These parties were mainly fans club of their respective leaders. Demokrat Party is a fans club for SBY, PDI-P is a fans club for Megawati, Gerindra is a fans club for Prabowo Subianto, and Hanura for Wiranto.

All of them are busy with short-term political gains for their own fame and their respective fans. Once elected, they will start to think about how to win 2014. None of them would dare to lay foundations to solve our long-term problems and challenges. They will offer short-term remedies, which impossible to solve long-term issues of inequality, social-economic injustice, for example.

These coalitions are established for short-term political interest, not because they share the same visions. Unfortunately media, critics, and activists are all trapped in this short-term game. Coalitions without visions is just a body without soul. 

Limited dialectics and quality discussions about visions, and how will they implement. The coalition, especially the one established by Demokrat-SBY looks beautiful like rainbow, but weak in principles. Opposition is also established only to make themselves different from the ruling coalition.

All of them will promise pro-poor and pro-people economic policies. But they do nothing in narrowing the gap between the rich and the poor. In fact most policies post-Soeharto era only widens the gap. They will talk about 6%, 7% or 12% annual economic growth, but pay less attention on the quality of the growth, who's growing and who's left behind or even declining in terms of relative prosperity.

Haryanto Suharman & Yosef Ardi

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Good Call

SBY's decision to appoint state secretary minister Hatta Radjasa to do political lobbying for presidential race and coalition talks has drawn criticism. SBY is accused of power abuse. Kompas.com quoted Irman Putra Sidin, constitutional expert, saying SBY should be careful in using his cabinet member to do political lobbying for his own interest as president candidate, not only because Hatta Radjasa is not a member of Demokrat Party, but "president candidacy is not the cabinet's affair. Don't be trapped in using State facilities and apparatus. He could assign someone from Demokrat Party to do that."

Good call. 

What the readers' comment? 

"See, that's how SBY do whatever it takes," one reader commented. 

"Ha..ha...was it SBY assigned Hatta or Hatta actively proposed himself to do the job, expecting position in the next cabinet...be careful, you might be upset like PKS," another reader commented.

"That's SBY, looks charismatic...but..."

"Lucky that someone finally raised this issue..."

"I just don't understand, why SBY did that. It only degrades his integrity."

Well, initially I thought Hatta went to Megawati's residence to talk about the status of the house as "gift from the State" to a former president. In that context, sounds logical, because state secretary minister normally takes care of such things. But then Hatta admitted he is SBY's "ambassador" to talk about "possible coalitions."

What do you think?

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The Banks and The Leeches

Bank Indonesia, the central bank, cut further its benchmark rate to 7.25% today. As usual, the decision will be followed with comments and suggestions to have the commercial banks cut their lending rates. Teguh Hidayat, journalist/researcher at yosefardi.com provides better understanding about how Indonesian banks built up huge profits.

BI's benchmark rate for Q1 2009 was 8.25%/annum (average), while in Q1 2008 the average rate was 8%. So, it is a 0.25% gap. How bank responded to the BI benchmark rate when it comes to saving accounts? Well, all of three major banks---BRI, BCA, and Danamon---cut significantly the interest rates.

 

Saving Account (%)	Q1 09	Q1 08	growth (%)
BRI	2.44	2.48	-2
BCA	2.80	2.86	-2
Danamon	2.95	3.32	-11

Ordinary people usually put their money in saving accounts. Wealthier people mainly put in time deposits. They're better off, because banks raised the interest rate for time deposits significantly.

 

Time Deposit (%)	Q1 09	Q1 08	growth (%)
BRI	10.52	7.55	39
BCA	7.22	5.99	21
Danamon	11.82	7.60	56

How about the lending rates? Well, major banks responded differently. BRI cut its interest rate by 6% to 17.26% in Q1 2009, but BCA and Danamon raised the lending rates instead. 

 

Lending rates (%)	Q1 09	Q1 08	growth (%)
BRI	17.26	18.29	-6
BCA	12.38	10.92	13
Danamon	19.53	17.91	9

Look at how big is the gap (spread) between cost of funds and the lending rates. It's around 8-10% (blended rates of savings and time deposits). Say that they put people's saving accounts in government bonds, they could get 8-9% margin. No wonder that most major banks recorded huge net profits in the past few years. Interestingly, five major banks reported stable net profit growth of 17% in 2006, 2007, and 2008. 

 

Profit (Rp billion)	FY 2008	FY 2007	FY 2006	FY 2005
BCA	5776	4489	4242	3597
BRI	5958	4838	4257	3808
Mandiri	5315	4347	2422	1232
BNI	1226	902	1928	1417
Danamon	1530	2116	1325	2003
Sub-Total	19805	16692	14174	12057
Growth (y-o-y)	18%	17%	17%

 

The banks are more than just healthy. With steady growth of 17% per year of net profit, you can't expect more than that. BCA's combined net profit in 2005-2008, for example, is Rp18.1 trillion. Say that the payout ratio is 50%, the shareholders of the bank had received Rp9 trillion in five years. Djarum Group as the owner of 41% shares in BCA might have received Rp3.6 trillion under such calculation.

Meanwhile, the real sector repeatedly complained about the interest rate spread. They believe banks, including the central bank, care only about the balance sheet and gigantic profit for the shareholders, while pay less attention in making banks the real lifeblood of the economy. For now, they're just like leeches. 

This is an archive of yosefardi.com

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How to Beat an Incumbent

Some politicians and observers believe that SBY would win the July presidential race easily. They believe that even in a three-way competition, SBY could seal the election in one round. But others believe the chance to beat SBY is wide open, even though facing an entrenched incumbent is a daunting prospect. There is nothing impossible in politics. So, beating an incumbent is possible with hard work and preparation. How?

An incumbent president has lots of advantages. He could be out there in public every time he wants. He or she has the luxury of being covered in media by the so-called Palace Reporters. He or she could go out there to every corner of the country as president. That's why being a challenger to incumbent president may seem impossible, especially if you're in position like Vice President Kalla.

Would be difficult to imagine how he would define his opponents, especially his current partner SBY. Would be easier to define other opponents like Megawati, for example. Would be difficult also to imagine how Kalla draw a contrast. He did during the legislative election with the tag-line "faster, better" to "indirectly" contrast Golkar & Kalla with Demokrat and SBY.

One of the most common advise to beat an incumbent is to start early. SBY, according to some observers, started early his plan to challenge the incumbent president Megawati in 2004. He won. This time, Megawati actually started early her challenge. Prabowo started somewhat late. He announced his intention last year. The latest is Kalla, only few weeks ago.

But start early gives no guarantee at all. Sutjipto from PDI-P started earlier his East Java governorship race, but in the first round to Soekarwo (Demokrat) and Khofifah Indar Parawangsa (PPP) who entered the race only few months ahead of the election. Soekarwo and his running mate Saefullah Yusuf won the race with huge "cost", gigantic financing support from some conglomerates in Jakarta.

Define your opponent, draw a contrast, and define the agenda are three other important steps needed to beat an incumbent. 

Prabowo, Megawati, and Kalla actually managed to define SBY. Prabowo and Kalla had also tried to draw contrast. Prabowo has the flexibility to draw contrast from SBY, and somehow he succeeded. Now young people increasingly believe that Prabowo could be a better leader than SBY. Megawati and Kalla found difficulties in drawing the contrast.

Define the agenda?

Frankly, none of the president candidates, including SBY, has defined their agenda clearly. All of them talk about abstracts agenda and difficult to measure targets. That's probably why the non-voters group easily beat the incumbent, because most of them actually don't care. They did that in the legislative election. The non-voters group dominated the "exit polls" with 40% of total eligible votes, triple the size of Demokrat which got about 20% votes. Other than the voters list problem, the non-voters group have very low trust on political parties and legislators.

This article is an archive of yosefardi.com.

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SBY-Boediono: An Anti-Climax?

Rumors swirling around the political elites this afternoon that incumbent president SBY has decided to choose economist Boediono as his running mate with huge concession to PDI-P in terms of cabinet posts. Is it going to be an anti-climax of the presidential race?

In an effort to prevent from being labelled as pro-Islam politics, president SBY has reportedly offered nine ministerial posts to PDI-P plus the speaker of the People's Consultative Assembly (MPR) for Taufik Kiemas, husband of former president Megawati Soekarnoputri. 

Under the deal, brokered by Hatta Radjasa (state secretary minister), who is also tipped as VP candidate for SBY, PDI-P will join the Demokrat Party-led coalition of nationalists and Islamic parties. "Initially SBY offered seven cabinet posts, but PDI-P asked for nine posts and SBY accepted them," one senior politician told yosefardi.com this evening.

Boediono is acceptable to PDI-P because he was Megawati's finance minister. Boediono is reportedly acceptable to other coalition members (PKS, PAN, PPP, and PKB).

This is a very quick development in Indonesian politics in recent weeks. Under such scenario, Golkar could be the main opposition party. "SBY thought it would be too dangerous to have both Golkar and PDI-P as opposition in the parliament. He is worried about hostilities from DPR," another politician said.

With PDI-P as coalition member, SBY could secure at least 75% seats in the House of Representatives (DPR). Looks like PDI-P has limited choice at the moment because they failed to secure support from Gerindra Party to issue one ticket for Megawati in the presidential race. 

"Without Gerindra, Megawati can't enter the race. That would be a big humiliation for her and PDI-P. That's why the party might take SBY's offer and claim Boediono as PDI-P's cadre," another politician commented.

Well, SBY-Boediono supported by PDI-P and Islamic parties would make the presidential race a head-to-head with Kalla-Wiranto. "We might need half round to give SBY a landslide victory. This is an anti-climax of the race we initially thought would be tough and interesting," the politician continued. 

Some PDI-P cadres staged a rally to protest the party's plan to join SBY's coalition today. They prefer to have PDI-P as opposition in the DPR. 

How other parties responded to the SBY-Boediono rumor?

PKB said "no problem." PKS, according to Anis Matta, secretary general of the party, said SBY's person had informed PKS that Boediono will be the VP candidate. "We're disturbed with the rumor about Boediono," Matta said while signaling possible exit for the party from SBY coalition. PPP and PAN might also pull out from SBY's coalition.

Ahmad Mubarok, deputy chairman of Demokrat Party quickly dismissed the speculation about SBY-Boediono saying "no decision yet. The decision will be made one day before the declaration."

As for PDI-P, the party executives met Gerindra Party executives tonight. Sources said Prabowo promised to support Megawati's presidential bid, but he won't take the VP candidacy for Megawati. 

Would be interesting to see whether PKS, PPP, and PAN would give their support to Prabowo or Kalla-Wiranto. "May be the race is still alive," one politician at Islamic party said.

How about SBY-Hatta Radjasa with PDI-P support? "Well, PDI-P is split between supporting Boediono and Hatta Radjasa," another politician said.

SO, may be it's not an anti-climax yet. Let's see what happens in the next few hours.

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Sleeping with the Enemy

Relationship between president SBY and vice president Jusuf Kalla reached its new low this week after SBY indirectly responded to Kalla's criticism and claims. There are pressures for Kalla to resign. Meanwhile, Golkar and Hanura decided to appoint industry affairs minister Fahmi Idris as the "campaign manager" for Kalla-Wiranto in the presidential race.

"No way that I have nothing (to claim for success)," president SBY responded to Kalla's claims of success in the past four years and four months of partnership.

"No need to make it public that we're faster, better. That's not good, so be careful. All leaders have their own strengths," SBY said.

SBY also said that "I never disturbed others, so if they want to be in a hurry, be it. But I have a plan and timeline," SBY said to respond Kalla's criticism that other president candidate has yet to make decision on VP candidate. "I made the decision to run with Wiranto, faster than anybody, because I believe faster is better. Nobody wants to wait, it's boring," Kalla said.

These are SBY's comments on Kalla's campaign that he could be a better leader (than SBY). It's just difficult to imagine how the president and vice president could run the administration in the next few months smoothly if they're busy to "attack" each other.

Not to mention that industry affairs minister, who is also Golkar party leader, Fahmi Idris has been appointed as chairman of the success team for Kalla-Wiranto pairing in July race. 

It is also difficult to imagine how other Golkar members within the cabinet (Aburizal Bakrie, Andi Matalatta, and Paskah Suzetta) could work in such a "tense" relationship between their boss and the president.

Relationship between SBY and Kalla worsened significantly after Kalla formally accepted "pressures" from Golkar regional leaders to run for presidency in early February. In late February, the relationship improved when SBY and Kalla met for the first time in a cabinet meeting where both agreed to compete fairly in the race. There were two other meetings between the two leaders which considered a confirmation of their breakaway. 

But since late April, the relationship turned to low point after Kalla made series of statements, especially about his contribution within SBY's administration and how he was indirectly rejected by SBY as running mate. The relationship has worsened significantly in the past two weeks, especially after Kalla formally announced his candidacy with Wiranto (SBY's former boss in the military) as VP candidate.

Since then, we never saw them together in public events. It is interesting to see whether Kalla and other Golkar members in the cabinet will resign, and focus on challenging SBY in July election. Else, we would see competition of resources within the administration to win the election. People? Well, their numbers counted only before the election. After that, politicians forget about how many people in this country they shall serve.

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When Power is all that matters

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