CGI to discuss infrastructure, judicial reform: Japan

Rendi A. Witular, The Jakarta Post, Jakarta

In an effort to increase the effectiveness of foreign loans, Japan will stress the importance of Indonesia improving its infrastructure and intensifying judicial reform during the upcoming meeting of the Consultative Group on Indonesia (CGI).

Japanese Ambassador Yutaka Iimura said that intensive efforts to provide sufficient infrastructure for businesses and improvement in the judicial system were crucial to help boost domestic and foreign investment.

"The issues of infrastructure, judicial reform and overall investment climate will be the key points raised during the CGI meeting," said Iimura after a meeting with Coordinating Minister for the Economy Aburizal Bakrie on Tuesday.

During the meeting with the chief economic minister preparations for the upcoming CGI meeting were discussed, scheduled for mid January, with loan commitments from the grouping of the country's main donors expected to be used to help plug the budget deficit for 2005.

The CGI loan is often attached to the implementation of a number of reform programs.

Iimura said that at the CGI meeting, donor countries would hear the result of a review from a working group on the implementation of lending terms set out by the CGI for Indonesia last year.

"We will hear the implementation review on judicial reform, illegal logging, poverty alleviation and investment conditions for this year before we discuss the financial needs of Indonesia," he said.

Japan is the largest lender for Indonesia.

The CGI, which groups 30 bilateral and multilateral donors, pledged some $2.7 billion last year in loans and grants for the 2004 state budget, plus another $700 million in grants and technical assistance for the regions and non-governmental organizations.

State Minister for National Development Planning Sri Mulyani Indrawati previously said the new loans from the CGI would not exceed last year's loans, as the government planned to reduce the debt ratio to 54.9 percent of gross domestic product (GDP) next year, down from 60.1 percent in 2004.

The loans are expected to cover only half of the 2005 state budget deficit. The government plans to revise next year's state budget deficit figure from 0.8 percent to 1 percent of the GDP, on the back of its plans to boost infrastructure development next year.

The business community has stressed the importance of improving infrastructure such as toll roads, seaports, airports and railways in a bid to support the country's growth target of 6 percent and above for the coming years.

Businessmen are also concerned about the poor judicial system here, which has created legal uncertainty for investors, with corruption on the part of law enforcers showing no signs of abating.