Report on Indonesia<\/p>\n
The 1997 World Bank Report on Indonesia, titled Indonesia
\nsustaining high growth with equity praises the country's economic
\nfundamentals but also strongly cautions the significant risks
\nahead, especially those related to external balance with rising
\nprivate foreign borrowings.<\/p>\n
The report, issued here yesterday, will serve as the main
\nbriefing on the latest Indonesian economic situation for the
\ncreditors grouped in the Consultative Group on Indonesia (CGI)
\nwhich will meet in Tokyo in the middle of next month. The World
\nBank -- the coordinator of the CGI creditor consortium --
\nreminded the government of the urgent need for a more vigorous
\npace of deregulation measures and for consistency and high
\ndiscipline in the enforcement of previous reform packages.<\/p>\n
Slightly different from the 1996 report, the latest report
\naddresses macroeconomic development and future growth prospects
\nand devotes much attention to three sectors: human resource
\ndevelopment (education, health); hard or physical infrastructures
\n(power, telecommunications, transportation) and soft
\ninfrastructures (incentive framework, business practices, legal
\nand institutional arrangements).<\/p>\n
Most of the policy recommendations are not new, but the
\nrepetition of similar suggestions already made in previous annual
\nreports, reemphasized with higher urgency.<\/p>\n
The latest report, for example, stresses the urgent need for
\nbetter governance and an improved legal system. It highlights the
\nimportance of good governance in reducing the cost of doing
\nbusiness, sustaining investor confidence, maintaining
\ninternational competitiveness and improving equity.<\/p>\n
The World Bank highlights what the general public,
\nparticularly businesspeople, have long complained about: the very
\nsmall improvements made in the complex web of domestic
\nrestrictions, fees and levies. It also highlights the widely held
\nperception that the invisible costs of doing business in
\nIndonesia are very high. This reminds us of one of the main
\nthemes of the election campaign by the three political parties
\nlast month -- the eradication of corruption.<\/p>\n
The government was once again warned of the great dangers of
\npolicy inconsistency and the seemingly slackening pace of
\nderegulation measures. The World Bank also took serious note of
\nslippage in the implementation of reform measures already
\nlaunched, showing that 800 of the announced tariff cuts were not
\nimplemented on schedule and deregulation in some sectors was made
\nrather meaningless by new restrictive rulings.<\/p>\n
It is not our intention to paint a bleak outlook by citing all
\nof the warnings. In fact, it is such policy recommendations,
\nbesides the shiny figures and indicators, which make the World
\nBank Report a reliable reference to Indonesia's economic problems
\nand prospects. No one has any doubt of the reliability of the
\nquantitative and qualitative analyses contained in the report.
\nAfter all, the World Bank resident staff in Jakarta is one of the
\nbank's largest country offices in the world which in part
\nreflects Indonesia's position as one of its largest borrowers.<\/p>\n
Even though the annual report is prepared mainly for CGI
\nmembers, private-sector analysts, bankers, portfolio and direct
\ninvestors as well as credit rating agencies certainly appreciate
\nsuch a comprehensive briefing. The report is a great help in
\nkeeping them posted of Indonesia's latest economic situation. For
\ninvestors or bankers, the ability to reliably assess the economic
\nsituation of a country as large as Indonesia with over US$100
\nbillion in foreign debts is very important in the current era of
\neconomic globalization.<\/p>",
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"sponsor": "Okusi Associates",
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