CGI applauds macroeconomic progress, urges deeper reform<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Indonesia's traditional donors grouped under the Consultative
\nGroup on Indonesia (CGI) have welcomed the country's
\nmacroeconomic improvements, but warn that slow progress in
\nstructural reform could impede economic growth.<\/p>\n
\"Much has happened since the last meeting in January, from the
\nIraq war to SARS ... but under these circumstances Indonesia has
\ndone remarkably well macroeconomically,\" World Bank country
\ndirector Andrew Steer said during a press briefing after the CGI
\nmidterm meeting on Monday.<\/p>\n
The World Bank is the coordinator of the CGI.<\/p>\n
The donors held their annual meeting on the resort island of
\nBali in January, during which they pledged some US$2.7 billion in
\nfresh loans to help finance this year's state budget deficit,
\nestimated at 1.8 percent of gross domestic product.<\/p>\n
The results of the half-day meeting on Monday will be used as
\none of the bases for deciding the group's next loan commitment to
\nthe country, which is expected to be made at the upcoming October
\nannual meeting.<\/p>\n
Despite the macroeconomic upturn -- reflected in modest
\ninflation, a lower central bank benchmark interest rate and a
\nstronger rupiah -- the donors emphasized the need for the country
\nto speed up legal and judicial reform in order to improve the
\ninvestment climate.<\/p>\n
\"(A)t the same time, investment is still not growing to the
\nextent that is required to promote growth and reduce poverty.<\/p>\n
\"So we talked about also what it would take to improve the
\ninvestment climate. One particular issue is legal reform,\" Steer
\nsaid.<\/p>\n
With the pace of progress in that area remaining slow,
\ninvestors have regarded the country's judicial institutions as
\nlacking credibility, putting a lid on efforts to lure
\ninvestors.<\/p>\n
With limited efforts to create a better investment climate
\nhere, foreign investors have remained rare, holding back the
\ncountry's economic growth and hampering the poverty reduction
\nprogram.<\/p>\n
More people could be absorbed into the workforce and lifted
\nout of poverty if the economy could post a higher level of
\ngrowth, at least 6 percent per annum.<\/p>\n
Among the items highlighted by the CGI members as evidence of
\nthe slow pace of legal reform were: crucial laws on a judicial
\ncommission and constitutional courts were still being
\ndeliberated, and there has been little progress in the planned
\nestablishment of an anticorruption commission.<\/p>\n
\"If Indonesia could make genuine progress on the investment
\nclimate, governance and legal reform, as it has on macroeconomic
\npolicy, it (the economy) could again become one of the brightest
\nperformers in East Asia,\" Steer said.<\/p>\n
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
\nJakti said in a speech that the government would continue to work
\non improving the country's legal and judicial sectors, as well as
\nother areas of concern for investors.<\/p>\n
\"Decentralization still poses problems, but the regions are
\nbecoming more sensitive to business climate issues. We would like
\nto accelerate this process ... ,\" he said.<\/p>",
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