'Significant moves' needed to deal with Indonesia's fiscal deficit

A senior Golkar leader has called on President Susilo Bambang Yudhoyono to take significant steps to tackle Indonesia's fiscal deficit, and lay the ground for the new government to cut huge annual fuel subsidies further.

Mr Luhut Panjaitan, 66, a retired four-star general and former trade minister, is reportedly being considered as a vice-presidential candidate.

Yesterday, he also called on political parties not to get bogged down by efforts to garner enough votes to field their candidates for president and vice-president.

Instead, they should be thinking about how the next administration can get enough support in Parliament to take tough measures that are for the good of the country, such as slashing subsidies, Mr Luhut added.

A governing coalition that has just over 50 per cent of the popular vote will be enough, he said, as one with too many parties will be bogged down by horse-trading.

His comments come a day after the Centre for Strategic and International Studies (CSIS) said survey findings showed the Indonesian Democratic Party-Struggle (PDI-P) could get 33.4 per cent of the vote in next week's general election and Golkar, 15 per cent.

Mr Lulut appeared to be hinting that PDI-P should work with Golkar after the April 9 election.

He said the third party could be an Islamic party. While he did not mention any by name, the CSIS said the National Awakening Party of late Indonesian president Abdurrahman Wahid, or Gus Dur, could emerge as the most powerful Muslim-based party.

Two weeks ago, Mr Luhut had controversially supported PDI-P chief Megawati Sukarnoputri's decision to name Jakarta Governor Joko Widodo, better known as Jokowi, as presidential candidate.

On speculation that he could be Mr Joko's running mate, Mr Lulut said: "The media made that claim. (Let's see) what happens."

Retired army general Fachrul Razi, one of several former military men who were at the news conference with Mr Luhut, said Mr Joko's deputy should have national experience, understand macro-economics, security and defence matters very well and can help safeguard PDI-P's position in Parliament.

The Indonesian Parliament has acquired much power since the fall of president Suharto in 1998. In recent years, it occasionally blocked government policies and also scuttled or watered down key programmes.

Mr Luhut, who was Indonesia's ambassador to Singapore from 1999 to 2000, now owns a coal mining company that supplies domestic power plants and cement manufacturers.

Reform is sorely needed in the energy sector, where rising fuel consumption and a weakening rupiah has seen the subsidy bill swell. Mr Luhut also urged Dr Yudhoyono to start scrapping inefficient power plants and boost the use of alternative energy.

Separately, Mr Edimon Ginting of the Asian Development Bank said in Jakarta yesterday that the government should continue with reforms to phase out fuel subsidies to free up funds for infrastructure projects, education and social programmes.

wahyudis@sph.com.sg

This article was published on April 2 in The Straits Times.

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