New points in revised LoI
New points in revised LoI
Ten economic recovery acceleration program
I: Creating stability in the financial sector
1. Strengthen the financial sector in order to improve the
economic fundamentals. Improvement of indicators in the real
sector should be followed by improvement of indicators in the
financial sector.
2. Increase coordination and synchronization of fiscal and
monetary policy between the Economic Team and Bank Indonesia (the
Indonesian Central Bank).
3. Improve the trust and create positive expectation among the
investors and the public at large towards the recovery of
national economy.
II. Boost export increase
1. Utilize the excess capacity in the manufacturing industry
sector to boost export.
2. Utilize the excess liquidity in the banking sector to boost
credit lending, both for working capital credit as well as
investment credit, for export-oriented activities.
3. Promote the creation of a competitive and hazard free business
environment in order to boost export.
4. Utilize the momentum of a competitive Rupiah value in order to
boost export.
III. Increase the Productivity and Welfare of Farmers
1. Conduct seed policy programs in order to boost productivity in
the agriculture sector and increase the income of farmers.
Through the seed policy, productivity could be increased in the
same area of land.
2. Promote the mechanization process in Indonesia's agriculture
sector, especially for area outside of Java, in order to increase
agricultural productivity.
3. Choose the top 20 agricultural commodities to be intensively
developed in order to be competitive in the domestic as well as
international market.
4. Promote processing industries in order to increase the quality
and added value of agricultural products, especially post-
harvesting processing.
5. Promote the development and use of technology in order to
increase agricultural productivity.
IV: Acceleration of banking and private sector restructuring
1. Conduct internal restructuring, both to the management and
business, for the re-capitalized banks in order to be healthier,
more prudent, competitive and profitable.
2. Promote the establishment of a consolidated national banking
structure, but not concentrated through merger and acquisition
among banks.
3. Persuade banks to provide bigger credit allocation for small
and medium scale businesses as an effort to improve the loan
portfolio quality of the banking sector.
4. Apply a more profitable exit strategy for the government, in
selling the assets of the banking sector.
V: Prioritize on equity-based recovery instead of loan-based
recovery
1. Increase the support from multilateral organizations, such as
the IMF, World Bank, Asian Development Bank, OECD, Islamic
Development Bank, etc.
2. In order to accelerate Indonesia's economic recovery and
create millions of job opportunities, the government should
support infrastructure projects with the following criteria:
2.1. It should create many job opportunities, whether
directly or indirectly.
2.2. It should promote the development of economy in the
respective region.
2.3. It should create maximum economic benefit to the local
community near the infrastructure project.
2.4. It should be feasible both economically and financially,
in order to attract domestic and foreign investors.
3. In order to finance the infrastructure projects, the
government should emphasize on the participation of domestic and
foreign investors by maximizing the leverage from multilateral
loans or G-to-G. It is expected that infrastructure projects in
the area of Gus Dur-Megawati should be cheaper comparing to the
New Order Era due to the decrease in KKN (collusion, corruption,
and nepotism).
VI. Value-creation privatization
1. Avoid fire-sales of assets belonging to SOEs and IBRA by
creating an added value before privatization is conducted through
business as well as financial restructuring.
2. Value-creation privatization will be conducted for sectors
that has appeal to foreign investors, such as telecommunications,
transportation, estate crops, hotel and tourism, infrastructure,
as well as oil and gas.
3. The government should promote foreign parties to be majority
shareholders as secondary operators through an open, fair and
transparent tender process. With the increasing number of foreign
parties as majority shareholder, the secondary operators could
attract foreign loans with competitive interest rates in order to
increase additional investment. The majority shareholder of prime
operators should be in the hands of the government.
4. Try to maintain the government's long-term buy-back share
option.
5. The government should promote to the people to own shares of
SOEs, either through the capital market or in form of unit
trusts.
VII.Conduct economic decentralization
1. Apply Law No.22/1999 and No.25/1999, especially in aspects
that deal with economic decentralization. The decentralization
process should be conducted in stages in order to maintain macro
and fiscal balance between the central and local government.
2. Promote the implementation of economic decentralization in the
local level, namely in areas of basic infrastructure development,
such as hospitals, schools, etc.
3 Boost economic development in the regions through trade and
investment cooperation between areas and regions.
VIII: Utilize the natural resource endowment
1. Promote the optimum utilization of maritime resources by
taking into consideration the principles of sustainability and
environmental safeguards.
2. Promote reform in the maritime sector and provide attractive
incentives for the participation of the private sector, both
domestic and foreign, in order to maximize the state revenue from
the maritime sector.
3. Participation of the traditional fishermen in the utilization
of maritime sector is a must, through the modernization of fish
catching equipment.
4. Conduct gradual liberalization in the oil sector, especially
in the downstream industry. Through this strategy, it is expected
that efficiency in processing, distribution and marketing in the
oil sector could increase, therefore increasing the government's
revenue.
5. Provide incentive in the upstream industry from the oil and
gas sector in order to attract investor in increasing the supply
of oil and gas.
6. Conduct domestic gas policy to increase the domestic use of
natural gas in order to minimize the energy sector cost for
industries and households. This policy would minimize the
domestic use of oil, therefore increasing the proportion of oil
to be exported which automatically increase the government's
revenue.
IX: Boost the development of micro, small and medium scale
businesses
1. Increase the credit allocation for micro, small, and medium
scale entrepreneurs through experienced and reputable financial
institutions in managing micro, small and medium scale credits.
2. Increase the incentive for financial institutions, in form of
administrative subsidies and technical supports for micro, small
and medium scale businesses.
3. Promote the development of primary products in the existing
productions centers by providing financial and non-financial
support.
4. Promote the integration, modernization, and credit expansion
to traditional financial institutions.
5. Provide tax incentive, administrative ease and support the
establishment of a competitive business climate in order to
increase productivity of small and medium scale enterprises.
6. Conduct revision towards financing schemes of micro, small and
medium scale businesses.
X: Increase the people's welfare in the rural areas in order to
strengthen socio-political stability
1. Increase the level of real rural wages by improving the terms
of trade for agricultural commodities.
2. Accelerate infrastructure projects in the district (kecamatan)
and rural sub-district (pedesaan) level, such as tertiary
irrigation, rural roads, etc. as part of the strategy to increase
real rural wages. The government is planning to increase the
volume of this program comparing to the previous years.