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Why we need a change, Sharpfokus51

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Government doesn’t work
In the U.K. & US there’s constant debate about which economic system works. Here in Indonesia it’s crystal clear. When government increases & takes over things, freedom reduces, the economy & stocks don’t perform. When government gets out of the way, freedom soars & wealth is created.

Changes
1970s to 1990s
The first example is the 1970s to 1990s. The economy was on its kness & despite having a dictator in charge, economic reforms opened controls on prices, investment & finances. The result was the greatest period of growth for the economy ever. This was the reason many of us came here.

2000s
The late 1990s collapse led to more dramatic changes. Free elections, an independent central bank, a freer press. There was privatization & assets were sold into the market. Fuel subsidies were cut, taxes were cut. The economy recovered from its lows & (for a while) we beat Apple.

2010s
The 2010s is a different story. Privatization has turned to nationalization, investment has become more difficult. China rather than the US has been feted & health & education programs introduced. Tax & GLCs raising capital has become a priority. The result, stocks & the economy have stalled.

Methodology
Economy
Here I’ve compared for you the performance of each of the 6 leaders through these changes. First using the economy. Not traditional real GDP, but nominal GDP in US$s. During the whole period we have gone from $6bn to almost $1tn. Performance is up to the last quarter in office.

Stock markett
The second is the performance of the stock market as seen through the JCI index. This is also done using US$ terms. For Suharto it’s not possible to use the market as the JCI only starts in 1983. From then to his departure in 1998 the stock market & the economy were both unchanged in $s.

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Average
Then to make it comparable I’ve first taken an average between the economic & the stock market performance. In the case of Suharto the economy only. Given the similarity from 1986 to 1998 this seems reasonable. Then I’ve divided by number of years in office to get average per year.

Results
The worst
The results might surprise you. The Suharto years ended in disaster after all the complications which dictatorship came with. But he is not worst performing. Despite the ‘freer’ elections we got, we have ended up with minority governments & a minority President is the worst performer.

The best
The best performer is the one who gave up the most power. Yes it’s also the shortest period but the changes which were the most difficult & dramatic have by far the biggest positive impact. All of the less government has produced positive results & more has produced the opposite.

Current
Today there are lots of worrying signs. Nationalization, which is never good. OJK which is one of the most prolific regulators in the world. We have economic ministers who were once sacked for blocking private investment. We have leaders who lost elections& poor legal decisions.

Need a change
With a year to go before the next elections, we need change. Here’s a wish list. First past the post elections, so no more losing leaders. Slash regulations on finance & investment. Privatization. Tax cuts. Legal reform & a return to the constitution. Who will step up, let’s see.

Sebastian
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