With global financial markets in sharp decline, stability and certainty have become the key factors in maintaining economic growth. As we have seen over the past few weeks, investors are jittery and they are willing to pull the plug at the slightest sign of uncertainty.
Given the conditions, Indonesia cannot afford to undermine business confidence. The government must do all it can to shore up confidence so businesses will keep investing in the economy. Unfortunately, recent events have not done much to boost business confidence. In the latest development, the Constitutional Court’s ruling that President Susilo Bambang Yudhoyono’s appointment of all 20 deputy ministers is unconstitutional will raise more doubts about the government’s operational efficiency.
We fully respect the court’s ruling and the government must abide by it. But it has proven to be an unwelcome distraction at a time when the government should be focusing on pushing infrastructure development and improving the investment climate.
In a hearing on Monday, Constitutional Court Chief Justice Mahfud M.D. and the eight other justices ruled that using the State Ministry Law, as the president did in the deputy ministers’ appointment, was unconstitutional.
The deputy ministers are appointed by the president and thus would have to step down when the presidency comes to an end. But there is a way out as the president can reappoint the deputy ministers by issuing a presidential decree.
These are testing times for businesses as well as governments. Uncertainty and even fear is spreading across the globe, creating intense volatility in the financial markets. Indonesia’s economic fundamentals remain strong but it is sentiment that is now ruling the markets and sentiment tends to be more emotive.