No debt rescheduling outside Paris Club mechanism<\/p>\n
Japan is the largest foreign donor and has contributed the
\nmost in cumulative investment to Indonesia. Japanese Ambassador
\nYutaka Iimura shared his views on Indonesia's economic problems,
\nincluding on President Megawati Soekarnoputri's recent call for
\nrescheduling the country's sovereign debts. Following is an
\nexcerpt of Thursday's interview, conducted by The Jakarta Post's
\nKornelius Purba.<\/p>\n
Question: Could you please comment on the recent economic
\ntalks held by senior government officials of Japan and Indonesia?
\nWhy did it take place before the Sept. 20 runoff?<\/p>\n
Answer: This senior officials' talk has been planned since
\nForeign Minister Yuriko Kawaguchi and Minister of Foreign Affairs
\nHassan Wirayuda agreed in December to hold this meeting.<\/p>\n
Regarding the timing, it was only the result of coordination
\nbetween the heads of the two delegations. It just happened to
\ntake place before the election. There is no connection between
\nthe timing of the election runoff and the talks.<\/p>\n
We feel this meeting was important. So far, we have had
\nseveral forums to discuss investment between the two countries.
\nDuring the talks, the two sides agreed upon the importance of
\nimproving the investment climate in this country. We also talked
\nabout concrete issues, like taxation, customs, labor and
\n(Japan's) Official Development Assistance (ODA).<\/p>\n
Foreign investors have complained for years about rampant
\ncorruption, labor problems, poor law enforcement and poor
\nstability, and there is unlikely progress in coming years. How
\nwill foreign investors adjust to this condition?<\/p>\n
I don't think progress will be unlikely in coming years. There
\nwill be progress, (and) depending on the political will of the
\nnext government and leadership, this country can improve its
\ninvestment climate.<\/p>\n
We have strong hopes that the next government will show its
\npolitical will and leadership to improve the investment climate,
\nparticularly in the importance of establishing a mid-term road
\nmap to improve the condition of investment, because investors
\nusually invest on a mid- and long-term basis.<\/p>\n
We sincerely hope that, as soon as the new government takes
\nover, it will show its willingness to cope with this problem and
\nestablish a mid-term road map for investment. Kadin (the
\nIndonesian Chamber of Commerce) is now drafting a mid-term road
\nmap proposal for the new government. Other international chambers
\nare also involved in the drafting. The CGI (Consultative Group on
\nIndonesia) is also working now to prepare a proposal for the new
\ngovernment.<\/p>\n
The improvement of the investment climate covers a broad range
\nof problems, not only economic issues, but also social problems,
\nlike labor, judicial reform, corruption.<\/p>\n
The government has submitted its 2005 draft budget to the
\nHouse of Representatives. What do you think are the priorities of
\nthe new government for next year?<\/p>\n
Priorities should be decided by the next government. What we
\ncan do is only to give suggestions. In this regard, I would like
\nto suggest three things.<\/p>\n
First, again economic problems, including improvement of the
\ninvestment climate, should be one of the top priorities, because
\nwithout this you cannot achieve a higher, sustainable economic
\ngrowth -- and without higher economic growth, you cannot absorb
\nthe 2.5 million new workforce entering the market. You cannot
\nsolve unemployment and underemployment, so you cannot solve the
\nproblem of poverty.<\/p>\n
Second, improving the delivery of social services like
\neducation, and also public health, would be very important. This,
\nagain, is closely related to poverty alleviation. My government
\nis ready to cooperate with Indonesia to cope with these problems.<\/p>\n
Third, consolidating stability. Indonesia has made remarkable
\nprogress not only in the economic arena, but also in the
\npolitical arena by moving ahead with the democratization of the
\ncountry. But you need to do more to bring about stability, and we
\nare ready to help Indonesia, like in Aceh.<\/p>\n
We have been supporting the peace process in Aceh and if
\nrequested, we will be happy to engage ourselves in the social and
\neconomic reconstruction of Aceh. Also, we are ready to help
\ncombat terrorism.<\/p>\n
President Megawati has officially requested the rescheduling
\nof its sovereign debt. As the largest foreign creditor to
\nIndonesia, how does Japan respond to this request?<\/p>\n
Actually Japan, until Indonesia graduated from the IMF
\n(International Monetary Fund) in December, was the main
\ncontributor to the Paris Club rescheduling mechanism. I think we
\nhave made quite a large contribution to Indonesia.<\/p>\n
But now Indonesia has graduated from the IMF program -- which
\nmeans Indonesia has decided not to ask for rescheduling. The
\nIndonesian debt problem is manageable -- of course, very serious
\nattention should be paid to manage this problem.<\/p>\n
But the decision to graduate from the IMF and not to ask for
\nrescheduling was the right decision, and we supported this.<\/p>\n
We don't think we can agree with the government of Indonesia
\non rescheduling its debt outside of the Paris Club mechanism.<\/p>\n
What are your views on infrastructure projects in Indonesia?<\/p>\n
When we talked about infrastructure projects, it was mainly
\nabout Japan's yen credit. We have been contributing a lot to
\nbuilding infrastructure in this country.<\/p>\n
The process of selecting projects usually starts with a
\nrequest from the Indonesian government. Then we proceed with
\nconsultations between the two governments.<\/p>\n
Of course, there are several problems in implementing the
\nprojects. The problems are usually caused by problems related to
\nthe economy?, like rupiah financing.<\/p>\n
What are your expectations for the next election?<\/p>\n
Every time I am asked this by my Indonesian colleagues, I say
\nthere are three things.<\/p>\n
One, democratization in this country. We strongly hope the
\nnext election will be conducted peacefully and in a fair manner.
\nSo far, the outcome has been very positive. The Sept. 20 runoff,
\nwe hope it will also be conducted peacefully.<\/p>\n
Second, we are neutral. We are ready to work with any
\ndemocratically elected president.<\/p>\n
Third, we hope the new government will be democratic, reform-
\noriented and possesses strong political leadership.<\/p>\n
Finally, we tend to forget about this situation: The election
\nin Indonesia is important not only in domestic politics, but it
\nalso has international implications.<\/p>\n
The country makes up 40 percent of the ASEAN population and,
\ngiven its strategic location -- as regional integration is in
\nprogress, global competition is progressing -- if Indonesia is
\nnot democratically stable and economically prosperous, it will
\nhave a negative impact on the overall situation in this region
\nand internationally.<\/p>",
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