Why this apathy?<\/p>\n
Reading local media reports these last few weeks does not give
\nus any hint as to the importance of the third CGI (Consultative
\nGroup on Indonesia) meeting scheduled to begin in Paris within
\ntwo days. For years, around times such as this, we have been used
\nto being bombarded by news reports, public debates, political
\nstatements, and economic analyses, before, during and after the
\nmeeting. And little wonder. One of the most publicized purposes
\nof the meeting is supposed to be to decide how far each creditor
\nmember will go in committing itself to supporting the Indonesian
\neconomic development program in the coming year.<\/p>\n
This time, the mood appears unusually lukewarm. It is as if
\nnothing of importance is happening, as if the public is not
\nconcerned, or couldn't care less about what could be going on
\nbehind those closed doors in Paris.<\/p>\n
In fact, the meeting will play a very crucial role in the
\ndevelopment of Indonesia's economy. Decisions made in this
\nmeeting will determine the extent of this country's economic
\ndevelopment, because this is the forum which decides how much in
\nexternal funds will be made available to finance development.<\/p>\n
Considering the relatively low level of domestic savings and
\nthe increasingly heavy burden of servicing current debts, yearly
\ncommitments to the CGI credit line have become vital -- almost to
\nthe extent of its becoming a conditio sine qua non -- to
\nsustaining Indonesian economic development. For the current
\nfiscal year, not less than 36.5 percent of the total budget
\nallotted for economic development is expected to be financed by
\nthe use of external sources -- that is, from CGI sources. This
\nportion amounts to around US$ 5 billion.<\/p>\n
That figure may not seem so very imposing until one realizes
\nthat within the span of the same year Indonesia will have to
\nraise around US$ 8.4 billion to service its external debt, with
\nits interest and loan repayments. This means that the expected
\nnew loans will merely decrease the outflow of badly needed funds
\nfrom this country -- not provide any fresh inflow. Moreover, one
\nstill has to consider the high probability that this year's debt
\nservice burden will increase in proportion to the exchange rate
\nfluctuations, especially the appreciation of yen. The World Bank
\nestimates that almost 50 percent of the US$ 50 billion in medium
\nand long-term public foreign debts are denominated in yen. An
\nincrease of just one percentage point in the exchange rate of the
\nyen means an additional US$ 16 million in the debt service burden
\nfor Indonesia.<\/p>\n
Even seen from a different angle, this third CGI meeting
\nshould be of high public interest. This fiscal year is the first
\nyear of the second long-term economic development period, which
\nis projected to promote Indonesia into the group of
\nindustrializing countries. According to government estimates,
\naround US$ 300 billion will be needed during this sixth five-year
\ndevelopment period -- Repelita VI -- to reach that target. The
\ngovernment expects to raise only about a quarter of that from
\ndomestic and external sources. The rest must come from the
\nprivate sector.<\/p>\n
If the government cannot raise the required amount through CGI
\nsources or other channels, the burden of the private sector will
\nhave to be increased proportionately. Otherwise Indonesia would
\nnot be able to sustain the required average annual economic
\ngrowth of more than five percent. The Indonesian economy would
\nnot be able to absorb the 2.5 million people entering the
\nworkforce every year. These potential producers of goods and
\nservices would become liabilities to the country, rather than
\nassets, both economically and politically.<\/p>\n
That reality surely deserves public attention, public interest
\nand public debate -- which has not seemed to be happening these
\nlast few weeks. It is indeed disheartening if all of this signals
\ninattention on the part of the public as to what is about to go
\non in the coming CGI meeting. Could it be that the local media
\nand the public are currently preoccupied with other things?<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/why-this-apathy-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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