Toward better economic growth and justice<\/p>\n
Dorodjatun Kuntjoro-Jakti, Coordinating Minister
\nfor the Economy, Jakarta<\/p>\n
Now let me turn to the agenda for 2003.<\/p>\n
The government's program for 2003 is based on the action plan
\nwe presented to the House of Representatives last year.<\/p>\n
In brief we expect to shift our focus from macroeconomic
\nstability that was the focus in 2002 to macroeconomic issues in
\n2003.<\/p>\n
More specifically we have identified three program priorities.<\/p>\n
The first is increasing investment, exports and employment.
\nThe second is continuing to reduce the burden of foreign and
\ndomestic debt. And the third is increasing investment in
\ninfrastructure to support accelerating economic growth.<\/p>\n
A more extensive description this program can be obtained from
\nthe Coordinating Ministry's website. The Minister of Finance, the
\nMinister for State Owned Enterprises, and the Chairman of the
\nInvestment Board (BKPM) will fill you in on efforts to improve
\nthe investment climate, reduce debt and accelerate infrastructure
\nin their remarks later this morning.<\/p>\n
But this effort has to be aimed at something, and that
\nsomething is the elimination of poverty and the threat of poverty
\nfor all Indonesians.<\/p>\n
This is no simple task, it combines effective macroeconomic
\npolicy that accelerates growth and controls inflation with
\ngovernment expenditure programs to improve education, health and
\ninfrastructure and an assessment of the role that government
\npolicy in whatever area may have on poverty. I am pleased to
\nreport that we have made significant progress on a Poverty
\nReduction Strategy and this should assist us in addressing these
\ngoals by mainstreaming our poverty focus.<\/p>\n
However we have to admit that reducing poverty or even holding
\nour own is going to be difficult this year. The bombing on Bali
\nhas put in jeopardy the livelihoods of hundreds of thousands of
\npeople and will increase poverty here and in the rest of
\nIndonesia, perhaps dramatically especially with continuing
\nuncertainty in the international environment and relatively
\nmodest growth here in Indonesia.<\/p>\n
The Coordinating Minister for Social Welfare will address the
\nsituation on Bali and our attempts to deal with it. However, I
\nwant to emphasize three things.<\/p>\n
First, we need the help of the international community in
\ndealing with the aftermath of this serious tragedy. Second, in
\naddition to humanitarian and development assistance we need help
\nupgrading security, including training and equipment for the
\ninstitutions involved. And third, we ask that you to consider
\ncarefully the merit of the travel warnings in place.<\/p>\n
I am sure that you agree that the security situation here on
\nBali is substantially improved, that we have done a remarkable
\njob in tracking down the terrorists involved. We know the
\nimportance that all nations place on the lives of their citizens.<\/p>\n
However there is an economic dimension to the fight against
\nterror.<\/p>\n
With your assurance that it is now, with the proper
\nprecautions, okay to return to Bali and Indonesia. The economy on
\nthis island and all Indonesia can grow faster, providing us the
\nbreathing space to advance the difficult and far reaching reform
\nagenda ahead.<\/p>\n
As I have indicated reforms have not proceeded evenly. We are
\npleased with our macroeconomic progress but know that we can not
\nsustain it if we do not make progress on governance.<\/p>\n
In fact two of the most difficult areas for reform areas are
\non the table this CGI including the justice sector and forestry.
\nWhile thus far we have made disappointing and uncertain progress
\nin reforming our legal institutions we believe that the pace of
\nreforms is picking up.<\/p>\n
I think you will be interested in our presentation of an
\ninteresting institutional audit being undertaken by the Supreme
\nCourt, and of developments with the Judicial Commission.<\/p>\n
Unfortunately reforms in forestry sector have proven to be
\nextremely complex and difficult as they cross-cut interests in
\nthe central government and the regions. We must persevere in
\nfinding practical and effective ways to deforestation which has
\nbeen accelerating and even begin to repair the damage. The key of
\ncourse is to prevent illegal logging.<\/p>\n
It is now clear that this will require looking at the
\nstructure of the logging industry, the regulations and their
\nimplementation. The Ministry of Forestry will present the
\npriority programs required to do this and the Coordinating
\nMinistry will work with them to develop an inter-agency taskforce
\n[forum] in this important sector.<\/p>\n
Progress in the area of decentralization has on the whole been
\nbetter. For example, we are pleased that we have received almost
\nall regional government budgets.<\/p>\n
This should give us a better picture on how government
\nresources are being used as regional governments fund development
\npriorities subject to the oversight of their own legislatures and
\ncitizens.<\/p>\n
I also expect to continue our dialog on on-lending, local
\nregulatory regimes and procurement improvements. We need to do
\nmore on regional barriers to trade and investment but we believe
\nthat the local governments are learning the importance of
\nresponsible policy here.<\/p>\n
We intend to accelerate this process with the introduction of
\nimproved an improved rating system that will allow regional
\ngovernments to assess their performance relative to their peers.
\nThis should assist the private sector and regional governments in
\nfinding a better and perhaps more transparent balance between
\nrevenue needs and business and consumer interests.<\/p>\n
In another session tomorrow morning, the National Development
\nPlanning Minister and the Finance Minister will look at the
\nissues in aid effectiveness.<\/p>\n
It is clear that this government and the next one are going to
\nsuffer from relatively limited resources. The key is to make the
\nbest of them. This goes beyond aid effectiveness to the use of
\nall government resources. We need to use our own and the
\nresources we receive from you more effectively, we need to
\nmonitor them more closely, and evaluate what has been achieved
\nbetter.<\/p>\n
Tomorrow we will share our thinking and programs in this area
\nand look forward to a dialog on this topic.<\/p>\n
Finally let me add my appreciation to those of you who have
\nbeen working with us on debt swaps. The programs here are win-
\nwin.<\/p>\n
We are delighted to reduce our debt stock as that is one of
\nour key programs. At the same time this program allows your
\ngovernments to dedicate the resources saved to critical programs
\nthat you support. For example we now have a program with the
\nGerman government that exchanges debt liabilities for increased
\nassistance to basic education and we are working on another such
\nproject with them. The government would like to continue and even
\nexpand this effort in the year ahead.<\/p>\n
From a macroeconomic perspective, despite a number of setbacks
\nand remaining areas of concern, last year's economic outcome was
\npositive and puts us in a position to push ahead with a
\nmicroeconomic agenda designed to reduce \"high-cost\" economic
\nbarriers and thereby improve the investment climate. However, we
\nhave to be realistic.<\/p>\n
The government's resources, financial and human are scarce,
\nand we are not as good at making our case to the public as we
\nwould like. It does us no good to promise, nor for you to ask for
\nmore than we can deliver. We need to set realistic targets,
\ntargets that recognize that 2003 is the run-up to an election
\nyear.<\/p>\n
We expect that by mid year the world economic situation will
\nbegin to clear and that investment and growth will continue to
\npick up but there are no certainties. Government policies are
\ngoing to be subject to a political microscope.<\/p>\n
We need to prioritize our efforts carefully, focus on the most
\nimportant areas for improvement and then execute the reforms
\nneeded to keep momentum. To do this we will need to work
\neffectively with our friends in the CGI and improve coordination.
\nWe ask for your continued financial support and assurance as
\nIndonesia moves forward on its reform agenda.<\/p>\n
The above is the minister's address to the two-day meeting of
\nthe Consultative Group for Indonesia which opened in Nusa Dua,
\nBali on Wednesday.<\/p>",
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