Govt draws up economic action plan for 2004

Fabiola Desy Unidjaja/Dadan Wijaksana, The Jakarta Post, Jakarta

The current government, whose term will end in 10 months, has vowed to improve the economy this year by capitalizing on improved economic momentum worldwide to counter possible uncertainties resulting from nationwide elections.

Improving economic performance would remain the focus of the government, and the government planned to do its best to keep the economy from being disrupted by the election process, Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti said on Monday.

"The election is not an excuse to neglect the economy, especially when we see various signs of a recovery worldwide. Many have predicted that the pace of an economic turn-around would increase this year," he announced after a Cabinet meeting -- the first this year -- with the main agenda of laying down guidelines for the government to manage the country's economy throughout the year.

Dorodjatun said that generating higher economic growth would be the highest priority. The government hopes to achieve this mainly by improving the country's business competitiveness.

"The only way to improve competitiveness is by addressing problems hampering exports and investment performance. Those tasks will be carried out by respective teams," he said, referring to the two teams consisting of Cabinet ministers set up to formulate ways to boost exports and investment performance.

He did not give details about how to resolve those problems but various reports have noted that drawing up a competitive tax policy, continued reform in the customs office, reducing labor- related conflicts and promoting legal certainty were all among the priorities to be quickly addressed.

All those have become contributing factors to the country's lower-than-expected economic growth over the years as rapid recovery in exports and investment performance has remained hard to come by, thus stalling efforts to reduce poverty and unemployment.

Dorodjatun admitted that there had been slow progress in the fight against poverty and unemployment, saying it was the result of a difficulties in translating a sound and improving macroeconomic climate to the various microeconomic sectors.

In the past two years or so, most of Indonesia's macroeconomic indicators have improved -- except for the unemployment rate -- as seen partly in the stable rupiah and easing inflation. But it has only helped drive the economic growth to a relatively stagnant 3 percent to 4 percent.

Such growth is insufficient to absorb a net influx of 2.5 million people entering the job market annually, meaning that the country's unemployment rate has been increasing.

Elsewhere, he said, another priority for the current economic Cabinet team was to make sure that during the elections, which will take place from April to September, economic activities will have to go on as much as normal as possible.

"This also applies to the distribution of basic needs, which is very important to help maintain social stability during the elections from the economic side," he said.

High also on the government's economic agenda this year was the drawing up of the 2005 state budget bill, which normally has to be submitted to the House of Representatives around August or September.

"That will be our last budget proposal. It is the task of the next government to deliberate the bill into a law," Dorodjatun said.