Editorial Notes

Review Indonesia's air fleet, encourage Japan's economic recovery, autonomy needed in India's management institutes

Editorial Notes is a selection of editorials from newspapers in the Asia News Network (ANN).

Military plane crash: Review country's air defence fleet

The Jakarta Post/ANN

Members of the Indonesian Air Force carry the coffin of Sergeant Sugiyanto, who was killed in the crash of an Air Force transport plane in Medan, at a cemetery in Pekanbaru, Riau, Indonesia July 2, 2015. PHOTO: REUTERS

Beyond our deep sympathy to those who perished in the Hercules C-130 military plane crash in the North Sumatra capital of Medan on Tuesday, the accident has again reminded us of the pressing need to renew our air defense fleet in particular and the whole national weaponry system in general.

The giant transport plane, popularly known as Herky bird, was produced in 1964 but began to serve the Air Force only in 1980. Tuesday's was the third major crash to have involved an Indonesian Military (TNI) Hercules since 1991.

Vice President Jusuf Kalla has admitted that the country currently operates 20 aging Hercules. After being briefed on the crash, President Joko "Jokowi" Widodo was quick to pledge an audit and modernisation of the country's defense equipment. But with the Indonesian economic outlook unfavourable for huge investment in arms procurement, the President's plan will take years to realise unless the government declares it a top priority.

For decades, armed forces across the world, including the TNI, have relied on the US-made Hercules to carry personnel and weapons, including bombs, both in wartime and peacetime, given its reputation as one of the safest of all aircraft. TNI Hercules played a pivotal role in the humanitarian mission in the aftermath of the devastating Aceh tsunami in December 2004 and other major natural disasters that have struck the country.

Transport aircraft like Hercules are inseparable from the national defense system, but policymakers have paid little attention to them compared with, say, jet fighters. The House has embroiled itself in acrimonious debates on lucrative procurement of US-made F-16s or Russian Sukhois, but never on Hercules. Many are unaware of the risks of operating aging transport planes, regardless of routine maintenance.

Media reports say the TNI's last purchase of Hercules was in 1980, when it bought 12 units of various types. One crashed on Tuesday. The TNI's Hercules fleet expanded when it received a grant in the form of five Super Hercules planes from state airline companies Merpati and Pelita in 1995 and four from Australia's Royal Air Force in 2013 following a diplomatic row over allegations that Australia tapped the phone conversations of Indonesian dignitaries, including then president Susilo Bambang Yudhoyono.

In comparison, between 2004 and 2014 alone, Indonesia bought 16 Su-27s and Su-30s and is set to buy a squadron of the latest variant of the Russian fighter jet, Su-35, in addition to receiving a grant of 24 refurbished F-16s from the US.

Any purchase of combat planes will for sure increase Indonesia's deterrence capability, which was evident in the immediate reaction of Singapore and Australia to order F-35s from the US following reports of Indonesia's plan to buy Su-35s from Russia.

But with attacks from foreign armed forces unforeseeable, we may have to revisit our arms spending by allocating a larger portion of the defense budget to buy new transport planes. This matches the TNI's plan to switch focus to humanitarian missions like disaster mitigation, given the country's vulnerability to natural calamities.

2. Have the wheels of Japan's economy at last started moving in a favourable direction?

The Yomiuri Shimbun/ANN

A pedestrian walks past a monitor displaying Tokyo stock index in Tokyo, Japan, June 29, 2015. PHOTO: EPA

It seems the wheels of our economy have finally begun to turn toward a virtuous circle. The latest survey results have certainly given us that expectation.

In the Bank of Japan's Tankan quarterly survey of business sentiment in June, the diffusion index (DI) of large manufacturers rose to plus 15 - three points higher than the figure posted in the previous March survey. The DI of nonmanufacturers has also gone up by 4 points to plus 23.

Business sentiment has recovered to a level close to what was registered in March of last year, when there was a last-minute surge in demand ahead of the planned consumption tax hike.

The improved business sentiment should lead to full-fledged economic growth, primarily led by the private sector.

The latest findings are characterised by a marked recovery in the sentiment of the consumer-related business sector, such as retail, hotel and restaurant businesses. Their sales, which had dropped following the consumption tax hike in April of last year, have apparently been picking up thanks to a tailwind of rises in wages and in the number of foreign tourists.

Capital investment planned for this fiscal year has also been revised upward by a large margin. The plant and equipment investment planned by large manufacturers, in particular, has surged by 18.7 percent from a year earlier, showing their bullishness in capital investment plans.

It is quite encouraging that many companies have shifted to proactive investment from their hitherto defensive stances of piling up reserves.

Part of the increased earnings of businesses has gone to creating wage hikes and capital investment, which will further push up the overall economy.

It appears that recovery in domestic demand is in progress - a scenario envisaged by the Abenomics economic policy package pursued by the administration of Prime Minister Shinzo Abe.

Yet we must avoid letting our guard down at all costs.

Worrisome is the fact that recovery in business sentiment among small and mid-sized companies has hardly progressed. The DI of small manufacturers stood at 0, down 1 point from the previous survey, while that of small nonmanufacturers edged up only 1 point to plus 4.

Many small and mid-sized firms have not undertaken any overseas ventures or exports, reaping fewer benefits from the yen's decline in value than large companies.

Unless these smaller firms, which employ 70 percent of salaried people in Japan, regain their vigor, the sustainability of an expansion of domestic demand will be open to question.

Also confirmed by the latest Tankan survey is a strong sense of labor shortages in companies. The lack of manpower will become a big constraint on corporate activities, particularly for smaller manufacturers, restaurant business operators and distributors.

In light of the declining population, a labor shortage is not a temporary phenomenon. What is needed are strategic solutions.

The government must beef up its policy support for businesses tackling labor-saving investments while strengthening its measures for increasing job opportunities for women and the elderly.

Guarding against changes in overseas economies is also needed. The slowdown in China's economic growth has become ever more apparent, giving rise to concerns of the collapse of its bubble economy. The decline in indices of Japan's industrial production in May is said to have something to do with economic slowdown in China and other Asian countries.

The turmoil in Europe, with Greece having effectively fallen into a state of default, may turn out to cause serious repercussions in the global economy. The government and the Bank of Japan must be increasingly on alert regarding these developments.

3. Let the country's premier institutions remain autonomous

The Statesman/ANN

The National Students' Union of India (NSUI) protest against the Indian Human Resource Development Minister Smriti Irani, in New Delhi, India, June 29, 2015. PHOTO: EPA

It would be presumptuous, even optimistic, to imagine that the HRD ministry is having second thoughts on its resolve to intervene in the functioning of the Indian Institutes of Management ~ among the very few bastions of excellence.

Far from it. Nonetheless, the decision to redraft the provisions of the IIM Bill, 2015, is doubtless in response to the outcry in the institutes in Ahmedabad, Bangalore and Lucknow over the Centre's attempt to curtail their academic and administrative freedom.

The BJP government's renewed initiative recalls the party's previous HRD minister, Murli Manohar Joshi's attempt in 2003 to modify the fee structure in the IITs and IIMs and increase the intake of students.

That essay towards ensuring the party's stranglehold is seemingly being continued by Smriti Irani in an untenable attempt to denude the few centres of excellence.

The exercise is fundamentally flawed, to say the least. Chief among the amendments on the anvil is that regulations on fees and admission, to be framed by the IIM Board of Governors, will have to be tabled in Parliament after it has been vetted by the law ministry.

The Centre's approval will not be mandatory, and this appears to be the singular concession that has been granted.

Unmistakable, however, is the scope for political meddling in the House after the document has been crafted by the Board of Governors, in itself a distinguished entity. The IIMs and the galaxy of talent deserve better than a cacophony of voices in the Lok Sabha.

This is political meddling through the rear door. Is it really necessary to refer matters relating to IIMs to Parliament? Will the legislature be the overarching regulatory authority?

It is far from clear whether Parliament will merely be kept in the loop, still less whether it will have the power to modify and/or ratify the proposed regulations.

In the manner of central universities, IIMs require only the approval of the Visitor (President) for any changes that they may wish to introduce.

Should the Bill attain fruition, members representing a cross-section of parties in the House, are likely to get precedence over Boards of Governors.

Even in the amended version, crucial issues have been left delightfully vague. Both the original draft and the amendments have made it pretty obvious that autonomy ~ the bedrock of the reputation of IIMs ~ will be diluted considerably.

Most importantly, the Centre has arrogated to itself the power to select the IIM Directors and Chairpersons, in itself a calculated deviation from the present system in which the government merely approves the choice of the Board of Governors.

Furthermore, the HRD ministry's role will be virtually institutionalised with the formation of a coordination committee, headed by the minister. Political intervention is complete.

The Bill deserves to be annulled... not amended.

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