Chief economics minister targets job creation
JAKARTA (JP): Indonesia's new Coordinating Minister for the Economy Dorodjatun Kuntjoro Jakti said on Thursday he would focus on job creation to expedite economic recovery.
He said implementation of the fiscal decentralization policy and reducing the country's massive foreign debts were also among his top priorities.
"Whatever the economic recovery plan is, it will be difficult to make it a success without job creation," Dorodjatun said at his home, shortly after President Megawati Soekarnoputri announced her Cabinet lineup.
According to him, the task of creating more jobs has slipped the government's attention for three years now.
The previous government came under fire for failing to encourage investment, which can create new jobs.
"We need our private sector to recover, as it is this sector that can create new jobs," he explained.
Helping the private sector, however, requires Bank Indonesia to loosen its monetary policy to lower the cost of investments.
The central bank has been keeping interest rates high to ease pressure on the rupiah and curb high inflation growths.
The central bank said it was in no hurry to lower the rates, not until after signs of economic recovery became evident.
Bank Indonesia Governor Sjahril Sabirin told local television stations that the rupiah could remain strong on market confidence in the new government.
Dorodjatun also expressed concern over keeping the budget deficit at around 3.8 percent of gross domestic product (GDP).
Pressure from the weaker rupiah and missed tax revenue targets during the first half is threatening to widen the deficit.
A large portion of government spending is U.S dollar denominated, with others tied to Bank Indonesia's high interest rates.
"The creation of more jobs, concrete results from the regional autonomy, and a resolution to our debt problems, will lead us, in probably several months, to a more stable rupiah," Dorodjatun said.
He said much of the country's budget woes stemmed from the country's massive foreign debts.
This year alone, Indonesia must pay debts of Rp 120 trillion, (about US$13.1 billion) of which half was foreign.
Tackling the foreign debts, however, hinges on Indonesia's ability to patch up relations with the global financial community.
Dorodjatun, who was previously the ambassador to the United States, is seen by many as the right person for the job.
He promised to press ahead with the signing of the letter of intent (LoI) with the International Monetary Fund (IMF) -- a key step in improving Indonesia's credibility before creditors.
Newly appointed finance minister Boediono agrees, saying the LoI will pave the way for restructuring Indonesia's debts.
"We must secure the second Paris Club meeting," he told visiting reporters at his home.
The club, which groups together Indonesia's sovereign creditors, will reschedule $2.8 billion in maturing debts this year if a deal with the IMF is at hand.
Boediono said his other priority was to draw up the 2002 draft state budget as there was not enough time to consult with the legislators.
He also called for better coordination between the government and Bank Indonesia.
The two had often been at loggerheads, as the central bank's high interest rates hurt the government's fiscal targets.
"We must synchronize the policies of the fiscal and monetary authorities," he said.
Meanwhile new Minister of Industry and Trade Rini Soewandi has set her eyes on efforts to boost export revenue this year.
Indonesia's export growth has been hurt by a global economic slowdown, and high investment costs hampered expansion plans.
The government initially hoped to outgrow last year's export revenue of some $65 billion by 10 percent. It later revised its growth target to 7 percent.
Rini, former president of giant automaker PT Astra International, said she hoped to outline a program to boost export revenue.
She said the rupiah's recent strength added to sales pressure, but competitive products might still make a turnaround in export sales.(bkm/tnt)