More trade and investment will lead to poverty reduction

The UN Millennium Project has filed a report titled Investment in Development: A practical Plan to Achieve the Millennium Development Goals (MDGs). The Jakarta Post's Riyadi Suparno and Zakki P. Hakim interviewed Mari Pangestu, the project's coordinator for the Task Force on Poverty and Development, and also Indonesia's trade minister, to get her views on the importance of development and trade in achieving the MDGs. The following are excerpts of the interview:

Question: What are the results and recommendations of the task force?

There are 10 reports on the project -- basically are business plans. The approach of the project was what we called diagnostic.

First, you have to diagnose the problem before you can prescribe what needs to be done, and there's no one-size-fits-all solution. Every country, every situation has different solutions.

Within a group of countries, you might see "off-track" least developed countries that are moving away from the MDGs for various reasons, and you have those countries that are "on-track" and other countries that are "above track".

You will (then) find different reasons why certain countries are off-track; sometimes the debt is too much, they can't get out of their debt trap, other times you find countries with conflicts or a lot of natural disasters.

One of the criticisms in the (Millennium Project) report, which got a lot of multilateral institutions somewhat upset, is when we said, "It's not enough for you to preach good governance."

Because even if they have good governance but they don't have the resources, they can't get out of the poverty trap. Apart from good governance they need the prerequisites to get out of the trap, such as basic investment and sufficient human resources.

And for countries that are on-track or even above track, it doesn't mean that they do not have problems achieving the MDGs because you have pockets of poverty inside every country.

The most difficult problems are in Africa, but the largest number of poor people is in Asia, our region. The three largest developing countries in the world -- China, India and Indonesia -- are in Asia.

I would (also) like to emphasize that we should not try to achieve the MDGs in a very sector-based way. There has to be a multisectoral approach, you must have a business plan and coordination between sectors. For example, you can come up with one program that can address education, nutrition and health at the same time.

In goal number eight of the MDGs, achieving fair trade is one of the targets. What's the link between trade and development and poverty reduction?

Trade is a means to achieve development. So, especially under the MDGs, the issue is how the role of trade in the development policies of developing countries should be designed to achieve the goals of poverty reduction, health and others.

Goal number eight makes very explicit two targets about trade. The first is to further develop a rule-based, predictable and nondiscriminatory global trading system, which will lead to fair trade for developing countries. The second target is to address the special needs of the least developed countries to provide better market access for their exports.

The problem with goal number eight is that there is no time line. All the other seven goals have time lines. This is one of the issues that the developing countries must fight for and must form a consensus on, to make sure that if developing countries do various things to achieve goals one to seven, then there must be a partnership, a compact, with developed countries to achieve goal eight because goal eight is part of contributing to the achievement of goals one to seven.

What about the role of private sector in achieving the MDGs?

Sure, the MDGs should be achieved by all stakeholders. I think the other part of this project is that countries must have the target of achieving the MDGs as their final target.

They should not bargain with it, they should not say, "Well, I don't have enough resources so maybe I can only achieve half of the goals or achieve the goals by 2020."

You should think that by 2015, I must achieve the MDGs, and to achieve that I need the following, including funding.

And that's why our project has identified that the official development assistance (ODA) from developed countries must increase to US$190 billion by 2015 to achieve these goals.

But there's also the sharing of the funding with the private sector, and that comes through investment. It's just basic development logic. If the government, either through its budgetary resources or through ODA, develops infrastructure, you will pull private investment because that's what you need.

Looking at Indonesia's situation in achieving the MDGs, how much more do we need trade and investment?

We basically need to increase investment so that exports will increase. It is a well-known fact that trade will reduce poverty and lead to increased employment.

Because if you look at trade as a contributor to growth, the kind of trade and investment that lead to increased employment for a country like Indonesia would be in labor-intensive production and also related to agriculture.

I think that's already in line with the government's overall policy of revitalizing agriculture, forestry and fisheries, and increasing investment in the manufacturing sector.

At the same time, infrastructure is also important because investment and infrastructure will create a lot of jobs. The construction of roads and bridges, for example, absorbs a lot of construction workers.

The service sector is also very important, and they're all related. You need to improve the service sector to have efficient exports.

All in all, you need more trade and investment in order for us to be able provide more employment opportunities and eventually achieve our MDGs.