Don’t be in a crisis, be on top of it

December 3rd, 2008 § 0 comments § permalink

Chairman of the Indonesian Entrepreneurs Association Anton Supit urged the nation’s leaders to declare that an economic crisis has taken place in Indonesia and be ready to make tough, though unpopular decisions.

I think asking an incumbent administration that’s going for reelection next year to be ready to lose popularity could be the ultimate Zen paradox.  Mr. Supit said:

We’re already in a crisis, but still unable to change our attitude.  We keep blaming others and working without a good plan.  Hundreds of thousands of people are being laid off, so don’t say that there’s nothing serious to be concerned about.  We need leaders who are ready to be unpopular by declaring that we’re in the middle of a crisis.

Here’s the definition of an economic crisis according to

A situation in which the economy of a country experiences a sudden downturn brought on by a financial crisis. An economy facing an economic crisis will most likely experience a falling GDP, a drying up of liquidity and rising/falling prices due to inflation/deflation. An economic crisis can take the form of a recession or a depression. Also called real economic crisis.

Yet, official statistics are indicating that the economy is still in a relatively good shape.  GDP is still growing 6.1% year on year, and it is spread across all sectors though not equally.  Sure, export industries such as textile, shoes manufacturers are taking hard beatings with order cancellations from global customers on the rise, but it’s hardly a cause to announce a nationwide crisis and risk losing consumer confidence as a result.

In fact, with consumer confidence index still creeping back to an optimistic level after three months, the most irresponsible thing to do for the government right now is to create panic in the market.