Thursday, January 22, 2015

You Fail Us, Mr. President

published @ The Jakarta Post

President Joko “Jokowi” Widodo deserves accolades galore. He is an entrepreneur-turned-public leader who is has responsive, hands-on, has an egalitarian demeanor and is result-oriented. He blazed a trail to set an unprecedented standard of modern leadership in Indonesia’s government. He put people’s interests first. He showed us that to govern is to serve.

A leader is not a boss behind a desk watching his subordinates work hard. A leader must glean data and information firsthand through impromptu visits. Then, he must make strategic decisions quickly, enable their implementation and control the work until the goals are accomplished. Jokowi has practiced what he preached during his stints serving as mayor of Surakarta and governor of Jakarta, which later catapulted him to the presidency.

During the barnstorming, he made many promises. He would develop a clean government and would be independent regardless of political coalitions. He would never buckle under the coalition party. The party would only join a coalition with no strings attached. And because of his impeccable track record, we believed Jokowi would be different. He gave us a glimmer of hope.

Prior to the appointment of his ministers, again, he stunned us by unprecedentedly seeking recommendations from the Corruption Eradication Commission (KPK) and Financial Transaction Reports and Analysis Centre (PPATK). This means Jokowi kept his promise of a clean government. Moreover, he scrapped fuel subsidies and burned foreign vessels caught fishing illegally. That proved Jokowi was decisive. So far so good.

However, his recent decision on a candidate for National Police chief really shocked us. Unbelievably, he proposed somebody who had been previously disqualified by the KPK and PPATK during the ministerial selection. Even after the candidate had definitively been named a graft suspect by the institution that has earned wide public respect and trust, the KPK, Jokowi still unequivocally defended his choice. We were taken aback. It was not the Jokowi we knew.

Worse, his political supporters ranging from TV stations, lawmakers to party chairpeople scrambled to convince us that Jokowi’s decision was right. They said that the candidate’s allegedly fat bank account had been cleared by an internal investigation as being legal wealth. And procedurally, the candidate was also recommended by the National Police commission. But their logic didn’t add up.

After believing in God, we, Indonesians, believe in the KPK. The institution would never name someone a suspect without solid proof. Nobody has ever been exonerated in a case handled by the KPK. Why does our beloved President Jokowi believe that this case will go against the grain?

He has nine candidates on his hands. Besides questionable integrity, the graft-suspect candidate achieved nothing of significance in the past, so why did Jokowi persistently promote him? Who gave him such lousy advice of abandoning the KPK and PPATK? Even if later, the KPK turns out to be wrong, why should he take the unnecessary risk of forfeiting his political capital of public trust? On this point, Jokowi has started to show his two-facedness on developing a clean government. We have also started to question his independence and think his law-enforcement commitment is too good to be true.

Jokowi’s decision on the National Police chief candidate ticked off his supporters, myself included. His volunteers, who believe he can bring Indonesia to prosperity, cried foul. But it seems he is unfazed, despite canceling, but not revoking, the candidacy.

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Thursday, January 15, 2015

Should Air Ticket Prices Be Regulated?



published @ The Jakarta Post

Low cost carriers (LCC) are an innovation of value in serving airline customers. Some customers value convenience, but others value low prices, especially for short-distance flights. This market niche has been well-filled by some airlines. To cut the price, a no-frills service is given.

Following the crash involving prominent LLC AirAsia, the Transportation Ministry is to set a minimum fare for air travel tickets. This policy will require that companies charge no less than 40 percent of the price ceiling. The basis for this policy is the argument that LCC neglect safety, jeopardizing passengers. But is it true?

Data reveal that the link between ticket price and flight safety is extremely tenuous. LCC know very well how to manage low margins in this highly regulated business. Ridiculously, a director at the ministry wondered how LCC could sell tickets for only Rp 10,000 (79 US cents) for the Jakarta-Medan route (The Jakarta Post, Jan. 8, 2014). To him that’s impossible.

He forgot that low prices are simply a marketing strategy. LCC do not sell all their seats at such low prices, and, of course, not all the time.

Such an impossibly low price is intended to prompt hype in order to spread the LCC brand. As a result, the load factor (the number of passengers compared with seats available) will be high, and the airline still has a good margin because of its economies of scale.

LCC are created by entrepreneurs pursuing profit; don’t teach the fish how to swim.

This would-be regulated minimum price will also aggrieve consumers. For the last decade, people have enjoyed travelling throughout the archipelago by plane because of these cheap prices.

Another concern is that the regulator will have no idea or control whether the funds from the increased price will be allocated for safety measures or simply for profit.

Worse, if the minimum price has been set and in the future – hopefully never — a plane crash occurs, then this policy will have been pointless and disadvantageous to all stakeholders.

But without regulating minimum prices, how do we address safety issues?

The responsibility lies with the Transportation Ministry. Instead of setting a minimum price, it’s better to issue strict regulations for flight safety. Plane maintenance, weather data provision, operation audit etc: the regulations must be put in place. LCC must comply with regulations. As long as all safety regulations are fulfilled by airlines, then the safety of the plane must be left to The Almighty.

The policy of minimum price definitely barks up the wrong tree. The focus should be on strict regulation, certificates of safety and good supervision. After that, let the airliners compete, and let the customers decide and enjoy the low prices.

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