CGI to discuss infrastructure, judicial reform: Japan

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.