Government urged to aim for higher growth<\/p>\n
JAKARTA (JP): The government needs to set higher economic
\ngrowth targets for the current 25-year development program, to be
\nended in 2019, by involving small and medium enterprises as the
\nprime growth movers.<\/p>\n
Joseph Manurung, S. Indro Tjahjono and Aulia Prima Kurniawan,
\nall engineers graduated from the Bandung Institute of Technology,
\nsaid at a presentation of their new book last week that Indonesia
\nshould set an economic growth target of 22 percent (based on
\ncurrent consumer prices) per annum in order to reach per capita
\nincome of US$14,972 by 2019.<\/p>\n
The book, entitled Reorientasi dan Reformasi Menuju Ekonomi
\nKerakyatan (Reorientation and Reformation Towards People-Based
\nEconomy), was written to commemorate the 50th anniversary of
\nIndonesia's independence.<\/p>\n
The authors calculated that the government's growth target of
\nseven percent per annum is equivalent to a 15 percent growth
\nbased on current consumer prices. They said that with the 15
\npercent growth (based on current prices), Indonesia could reach
\nper capita income of $3,321 by 2019.<\/p>\n
President Soeharto, in his state of the nation address before
\nthe House of Representatives on Aug. 16, revised upward the
\ngrowth target for the current sixth Five-Year Development Plan
\nperiod (Repelita VI), started in April last year, to 7.1 percent
\nper annum from the original target of 6.2 percent.<\/p>\n
To attain the revised growth target, Soeharto raised the
\ntarget of investment during the current five-year plan
\ndevelopment plan to Rp 815 trillion ($360 billion) from the
\noriginal target of Rp 660 trillion.<\/p>\n
Joseph, Indro and Aulia suggested that, in achieving the
\ntargets, the government should no longer rely on large entities,
\nwhich, they said, have benefited a lot from the last long-term
\ndevelopment program.<\/p>\n
\"To achieve the targets, the government should now empower
\nsmall and medium scale companies so that they would be able to
\ncontribute significantly to the country's gross domestic
\nproduct,\" Indro said.<\/p>\n
Joseph criticized the government, which, according to him, has
\npractically ignored small and medium enterprises during the first
\nlong term development program. Therefore, they have been left
\nfurther behind by large companies.<\/p>\n
\"During 20 years since the New Order came to power, the
\ngovernment has been letting the processes of distribution of
\nwealth move on by itself, while expecting an automatic trickling-
\ndown from large entities,\" Joseph said.<\/p>\n
He added that during the first long-term development program,
\nthe government spoiled large businesses by giving protection,
\nmonopoly rights and cartel-like associations.<\/p>\n
Consequently, he said, large companies practically controlled
\nthe country's production sectors. The top 300 large companies,
\nfor instance, already controlled 80 percent of Indonesia's total
\ngross domestic products in 1991.<\/p>\n
Criticism<\/p>\n
Concurring with Joseph's claim, Indro, who is also an activist
\nat non-governmental environmental organization Network for Forest
\nConservation in Indonesia, criticized the way the government
\ngenerated funds to develop the country. He said the government
\nwas exploiting too much of the country's natural and human
\nresources, such as oil and gas, minerals, forests and labor
\nforces.<\/p>\n
He also questioned the government's budgeting policy which
\nrelies on foreign loans to cover its current account deficits.
\nIronically, he said, the current account deficits have resulted
\nmainly from the deficits in services sectors, including the
\nincreasing servicing of foreign debts.<\/p>\n
According to the new book, Indonesia has suffered deficits in
\nits current accounts since the 1983-1984 fiscal year, with annual
\ndeficits averaging $2.718 billion per annum.<\/p>\n
The government's servicing of foreign debts has also been
\nincreasing from year to year, the book said. During the third
\nFive-Year Development Plan (Repelita III), the foreign debt
\nservice accounted for 15 percent of the government's routine
\nspending per annum. The percentage rose to 38 percent per annum
\nin the Repelita IV period and to 47 percent in the Repelita V
\nperiod.<\/p>\n
Quoting the World Bank's data, the book said Indonesia's
\noutstanding foreign debt increased by 2,090 percent within 20
\nyears from $3.1 billion as of 1970 to $67.9 billion as of 1990,
\nof which $55.5 billion was owed by the government. The government
\nhas said that currently Indonesia's total foreign debts stand at
\nsome $100 billion.<\/p>\n
As a result, Indonesia's debt service ratio is getting worse,
\npresently standing at 30 percent, which is just below Mexico's,
\nBrazil's and Bolivia's, and far from the acceptable level of 20
\npercent. In 1992, the country's debt service ratio was even
\nworse, standing at an alarming point of 39 percent. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-urged-to-aim-for-higher-growth-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}