JP/5/MEG3

To operate a modern economic system without the support of a reliable national banking system is surely impossible. We must learn much from our bitter experience in managing the banking sector; especially after economic liberalization in 1983. We have violated so many conservative norms in banking management, which have been established over a long period. We really need to learn from this experience, to prevent us from becoming like the old man who lost his cane twice.

Like it or not, today we are part of a new world, which has become global in the field of politics, economics, and social and cultural issues. What happens in another country also influences our nation and vice versa. In pursuing economic interests, we have ventured into formal commitments with other countries, both bilateral and multilateral.

In general these commitments are designed in the spirit of mutual benefit. It has to be admitted that some of them have now become quite burdensome. Therefore, the opinion that has emerged among us to request adjustment to such burdensome commitments is not entirely wrong. Notwithstanding the reasons and without any less appreciation for the good intentions behind such thoughts, a commitment is a commitment. An agreement is an agreement, whether national or international.

We must do our utmost to honor the obligations contained in these commitments. Nonetheless, we would certainly be deeply grateful if friendly countries and related creditors could give us some room and breathing space, to enable us to restore our national life in this difficult transition period.

We are also facing a short-term challenge which we must respond to with hard work, namely our participation in the ASEAN Free Trade Agreement and the World Trade Organization. Indeed, I believe it requires great strength to maintain our national competitiveness in an increasingly open and competitive international trade, when our economy is at its lowest bargaining position.

Allow me now to touch upon the issues of recovery and efforts to maintain the stability of our national security and defense. There is not much that we can do without security, or if the borders of our territory are trespassed in the absence of any the capability on our part to prevent or counter such violations.

We need an effective, highly disciplined security system and personnel under government control, yet who have the spirit of the people.

Along with national reform aimed at creating a more democratic Indonesian society, the Indonesian Military (TNI) has pledged its commitment to continue its internal reform through concrete measures, to become a professional and functional instrument of state defense, and to uphold democracy and to abide by the law and to respect human rights.

We have consistently also started to separate the National Police from the TNI, although in certain cases the police need military support. Yet the TNI must focus on defending national territorial integrity, while the police must concentrate more on creating and maintaining security and a feeling of safety among the people.

Therefore along with the need to enhance the professional capacity of the TNI and the National Police, it is the state's duty to ensure the availability of equipment and minimum backup for the task entrusted to them of maintaining security and defense. It would be unfair if we gave the TNI a demanding task but did not provide them with proper equipment and logistical support in terms of the appropriate quantity and high quality.

There is therefore a compelling need for an agenda and clear schedule to pursue on the national policy on TNI and the National Police. There are many regulations to be amended, basic doctrines and their implementation need to be revised and education and training programs to be conducted.

I understand that there are issues inherited from the past with regards to the repositioning of the TNI and the National Police, specifically severe violations of human rights in armed conflict areas. We learned of some of the violations from the international media right after they took place, but some came to the fore only recently.

It must be admitted that many such reports have cornered us. Yet our stance remains clear. Should there be convincing evidence of severe violations of human rights outside the battleground, those found guilty should be held responsible and legal action must be taken against them, according to the law. We will not entertain any impression of covering up such severe abuses. For it is clear that Indonesia is a state based on law. No single person is beyond the reach of law, not even a president.

In preparing ourselves to embark upon a better future, allow me to dwell on the three questions from the past that need a comprehensive solution. They are the questions of East Timor, Aceh and Irian Jaya.

Right from the outset, the issue of East Timor has had an international dimension, especially in the framework of decolonization. There was no specific design of the Republic of Indonesia in that region.

Our involvement in the region was unintentional, for it was the stance adopted by the state's founding fathers that the territory of the Republic of Indonesia was the ex-territory of the Dutch Indies. No more, no less.

Without delving again into the causes, we have now fundamentally settled the question of East Timor in 1999 and have openly respected the choice of our brothers and sisters in the region to have their own state.

Yet some lingering issues remain, such as the solution to the problem of a considerable number of refugees in the province of East Nusa Tenggara and assistance for our East Timorese brethren who feel more comfortable to remain in our territory or who have become Indonesian citizens.

The issues of Aceh and Irian Jaya are quite different with that of East Timor. These questions are strictly internal matters, especially connected to nation- and state-building.

We have to honestly admit that the crux of the issues is the various policies of the past, which have been considered very oppressive to the people in those regions. It is therefore natural that as a nation we offer a sincere apology to our fellow citizens who have long suffered from those incorrect policies.

But apology is not enough. It must be accompanied by a series of rearrangements to restore things in the shortest possible time.

Therefore, we are now carrying out basic corrections in the two provinces, not only by paying respect to the cultural identities and specific characteristics of the people, but also by granting the regional administrations more authority to manage their respective regions in the framework of special autonomy.

Yet, one thing is clear; all these should remain within the context of preserving the territorial integrity of the unitary state of the Republic of Indonesia.

Allow me now to take this opportunity to underline the urgency of maintaining the country's territorial integrity.

Territorial integrity is not only of highly important attribute of a nation-state, but also serves as an integral part of a stable world order, which has permanent boundaries. In this context, any movement intending to secede from the unitary state of the Republic of Indonesia would not only face our strong rejection, but would fail to win support from the international community as well.

This fact needs the close attention of the leaders of such separatist movements, especially those who have opted for the path of armed violence, which has led to so many victims among innocent people. From this forum I call on my brothers and sisters who, due to various reasons, have chosen armed violence, to return to society and together build a new Indonesia, a better one than what we have been through.

As I said earlier, now we have at our disposal the instruments of special autonomy, which I believe provides enough room to fulfill your valid aspirations and interests.

It was based on my comprehension of the above conditions that I formed the Gotong Royong Cabinet to carry out the mandate you have entrusted to me until the end of my tenure in 2004.

I apologize for being rather late in announcing the line up of the new Cabinet. The reason was simply because it was not easy to select the most suited among so many candidates who were all the nation's best sons and daughters. It was only due to the limited posts available that I could not accommodate all the candidates to take up the posts of coordinating ministers, portfolio ministers, or state ministers. Hopefully the next time round the others will get their chance.

In a bid to respond to the above issues allow me to repeat the six programs of the Gotong Royong Cabinet.

* Maintaining the nation's unity in the framework of the Unitary State of the Republic of Indonesia;

* Continuing reform and democratization in all aspects of national life through a clearer framework, direction and agenda, while improving respect for human rights;

* Restoring the economy and strengthening the basis for people's economy;

* Consistent upholding of the law and creating a feeling of security and eradicating corruption, collusion and nepotism;

* Conducting a free and active foreign policy, restoring the dignity of the state and nation and recovering the trust of foreign countries, including international donor institutions and investors, in the government; and

* Preparing a safe, orderly and direct general elections in 2004.

I am fully aware that this Cabinet will be unable to perform without the understanding, cooperation and support from every sector of society. From this forum, I again request that understanding, cooperation and support. Only through this approach will we be able to gradually come out of this deeply painful crisis.