More trade and investment will lead to poverty reduction

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.