President Soeharto unveils 1997-1998 draft budget

President Soeharto unveils 1997-1998 draft budget

President Soeharto unveiled the draft of the annual state
budget yesterday before a plenary session of the House of
Representatives (DPR). The following is an unofficial, condensed
translation of the budget transcript.

JAKARTA: The Southeast Asian region remains a region with high
growth rate. Our own economy is moving with great dynamism. If
fellow regional countries are able to arrange a good cooperation
in regional, sub-regional or bilateral terms a synergy will
emerge that will multiply the advantages of this region.

At home, 1997-1998 is a "political year". We will all be
busily involved in various major activities, which are
fundamental in nature for our national and constitutional lives.
The mechanism of national leadership will reach its culmination
in 1997-1998, with the General Assembly of People's Consultative
Assembly (MPR) that will determine the 1998 Guidelines of State
Policy and appoint the President/Mandatory of MPR who shall carry
out these Guidelines. The General Assembly of the MPR will be
preceded by a general election, which is a festivity of democracy
for us. Normally as a festivity, the general election must bring
happiness to all of us.

General election brings happiness because the people shall
exercise their democratic right and determine their future by
electing representatives who will carry their hopes. General
election will bring happiness because we have completed one stage
of development and we shall enter the subsequent development
stage that promises better prosperity and well-being to the whole
society.

Therefore, we have to prevent general election from becoming
the contrary, namely creating anxiety and sufferings to the
people. Our nation has become more mature, including in the
implementation of democracy. General election campaign that
causes damages both physical and properties to the people must be
avoided. The excesses of such a campaign will only disgrace the
general election and tarnish democratic practices that we want to
uphold in this country. For this reason, we want to put the
emphasis of coming general election on a dialogue campaign, by
discussing development issues confronting the Indonesian nation
and subsequent development programs.

Automatically, it is unavoidable that the political climate
will "heat up". It means that all parties concerned prepare
themselves to participate in the reformation process we go
through every five years. The Guidelines of State Policy that we
formulated once in every five years contain a reform. It is
impossible for us to set precisely the same Guidelines. The
elaboration on the Constitution itself demands us to take into
account the dynamism of our society every five years. We also
renew the government every five years. What we have to avoid is
an uncontrolled situation, clashes and animosity among ourselves.
This certainly is unhealthy and even endangers our nation. We
have all sincerely affirm that Pancasila is the sole fundamental
principle of our life as a society, nation and state. Should
there be differences among us, they are not antagonistic. Because
they are neither ideological nor fundamental in nature, but more
on how to reach the goal we have all agreed upon. This kind of
differences is the characteristic of democracy. Therefore, we can
overcome them through democratic means as well. We should see to
it that they are not aggravated unproportionally, particularly
when irrational elements are involved, which are primordial in
character, that disseminate sensitive issues to the people. These
practices are identical with sowing the seeds of dissension to
destroy the national unity, as exemplified by recent incidents
in a number of places.

However, the overall political stability and security at home
continue to be well under control. Although its dynamism is high
and not without problem, but the national stability continues to
be preserved in a sound manner.

This situation allows us to continue development on the basis
of the Trilogy of Development. In these last three years during
Repelita VI -- our economic growth rate has been quite high, i.e.
7.5 percent in 1994 and 8.2 percent in 1995. While in 1996, it is
predicted to be around these figures. Which such growth rate, the
per capita income of our nation 1995 has surpassed US$1,000.

This trend of high growth has apparently not been followed by
higher inflation rate. Conversely, the inflation rate since 1993
continued to decline. In 1993, it was 9.8 percent, then it went
down to 9.2 percent in 1994, and even lower to 8.6 percent in
1995. In 1996 we have just passed, it dropped further to 6.47
percent.

To preserve economic stability, we should seriously control
the current account deficit. In 1995/1996, it was $7 billion or
3.4 percent of the gross domestic product (GDP). In 1996/1997, we
predict that it will rise to $8.8 billion or about 4 percent of
the GDP. This situation is mainly caused by the rather slow
growth rate of our export, even though the rate of import
has also slowed down. This is also accompanied with the
relatively high services account deficit that led to the
increased current account deficit. However, with the strong
capital inflow, this deficit has been compensated and foreign
exchange reserves are in a solid and safe position.

Indeed, we have to try to reduce this current account deficit.
There are only two ways to do it, i.e. to increase export and
control import. We must continue to boost export, not only
through investment that will produce more expanded and
diversified export products but also through the enhancement of
the competitive edge. Higher competitiveness can be achieved
through increased efficiency and productivity.

Increased efficiency involves the improvement of our economic
institutions, including the market, economic agents and state
apparatus itself. In this context, the deregulation and
rebureaucratization must be continued, coupled with removing the
unnecessary economic burdens. Unauthorized and illegal levies
which are in contravention with higher rulings should be stopped.

We must control import by using as much as possible domestic
products and services. The domestic market will grow bigger. The
expanded market must, first of all, become the market for our own
products. In the current globalization era, his effort can no
longer be made through government protection. The people
themselves must have the awareness to buy domestic products,
rather than imported ones. This is the manifestation of a new
nationalism. Producers should also continue to improve the
quality of the products and raise their competitive edge. In
promoting investment, the business community should not use
imported components if they are already produced domestically.
Investment must be geared towards producing competitive products
or saving foreign exchange.

One of the worst manifestations of gap is in poverty. During
the current Repelita VI, we continue the effort of poverty
alleviation, that we have quite successfully carried out during
the First 25-Year Long-Term Development program. Since the first
year of Repelita VI, we have intensified this effort through
development programs in all sectors and all regions. In addition,
a special program has been launched to free the people who are
trapped in pockets of poverty that we refer to as "the least
developed villages". The result has been very encouraging. I have
just received a provisional report of the outcome of the 1996
National Socio-Economic Survey that is being used as the basis to
count the number of people still living below the poverty line.

The last figure we have been using was the result of the 1993
National Survey. The number was close to 26 million people who
were living below the poverty line or about 14 percent of the
total Indonesian population. Among these poor people, there are
around 17 million or almost 14 percent of the rural population
and more than 8 million persons or approximately 13 percent of
the urban population. Based on the 1996 National Survey, the
number of the poor people has dropped to around 15 million or
about 12 percent; and in the urban areas it became more than 6
million persons or 10 percent of the population.

It is against the background I have just explained that the
1997-1998 Draft State Budget has been prepared. In compliance
with the Guidelines of State Policy, the budget is dynamically
balanced. This means that state expenditures are adjusted to its
revenues. Should in its implementation the state revenues surpass
its expenditures, the balanced can be saved as development budget
reserve.

The 1997-1998 State Budget is envisaged to be balanced at the
level of Rp101.1 trillion. For the first time our State Budget
surpasses Rp100 trillion. Domestic revenues are estimated at Rp
88.1 trillion or 87.1 percent of the total state earnings.

In calculating the sources of domestic revenues, we also want
to minimize the element of unpredictability. This is also aimed
at ensuring that the spending of the 1997-1998 budget will not
differ too much from the original plan. Also to prevent the
revision of development projects due to revenues that did not
reach its target. Therefore, even though the realization of the
first semester of the 1996-1997 fiscal year showed the average
export price of oil was higher than $19 per barrel, we set the
bench price at $16.5 per for 1997-1998. The setting of this bench
price is based, among other things, on the possibility of
increased oil production in the world.

Domestic revenues rely heavily on taxes. We predict our tax
revenues will be more than Rp 64 trillion or increase of almost
16 percent from the previous year.

With an economy that continues to grow, as a result the tax
revenues will also continue to increase. For this reason, it is
expected that tax revenues collected from the public will have
the highest increase, i.e. almost by 23 percent.

The level of state revenues primarily depends on our awareness
to pay tax. Because in our tax system the people assess their
own tax. The ratio between tax and national non-oil/gas
production shows that we still have to enhance the awareness to
pay tax. For the year 1995-1996, the ratio was only around 11
percent. This figure was the lowest among our neighboring
countries in ASEAN. For the 1997-1998 fiscal year, our tax ratio
only reach about 12 percent. The Philippines, which has the
second lowest ratio after us, already has a ratio of
approximately 16 percent. Even more so when we compare it with
Malaysia which has a ratio of higher than 33 percent.

If only we had the same tax ratio as the Philippines, namely
around 16 percent, our domestic revenues would have increased
to around Rp 21 trillion. With such substantial funds, we could
carry out more development activities. Or, conversely, we could
reduce foreign loan for development purposes.

We must seriously pay attention to this matter. On this
occasion once again I appeal to all tax payers to earnestly
fulfill their obligation. We must always remember that tax is not
just a mere source of revenues, but it is also a means to create
justice.

Furthermore, with regard to expenditures, the routine
expenditures are envisaged to reach Rp 62.2 trillion or an
increase of 10.8 percent compared to those allocated for the
current fiscal year.

The largest routine expenditures are for personnel
expenditures, both for civil servants at the central and regional
governments. The total amount reaches more than Rp 32 trillion,
which means an increase of close to 16 percent from the current
one.

Every time state expenditures are drafted for civil servant
salaries, automatically the effort to improve their well-being is
taken into consideration. The well-being of civil servants today
is much better compared with in the past. So far, the salaries
have been raised by stages.

However, the advanced pace of development also leads to
greater needs and higher expectations of man. We still feel the
burden of a civil servant's life, despite the substantial budget
allocated for personnel expenditures. The problem is the great
number of our civil servants, because our country is indeed big,
with a vast territory and huge population which is unevenly
scattered and live in thousands of islands. All of this requires
government services in the widest sense of the word.

Another large expenditures are for debt servicing. The
expenditures for next year's debt servicing will be lower, both
in terms of its percentage in the routine expenditures and its
absolute value. In 1996-1997, the debt servicing reached over Rp
20 trillion, which constituted 36 percent of the whole routine
expenditures. For next year, the expenditures are envisaged to
reach more than Rp 19 trillion or around 31 percent of the whole
routine expenditures.

The lower debt servicing is caused by two reasons. Firstly,
because of the Yen depreciation; and secondly, because of the
accelerated repayment of government high-interest external debt,
namely above 10 percent. During the last three fiscal years, the
acceleration of external debt repayment amounted to $2.6 billion
or equivalent to about Rp 6 trillion. Today, the process is going
on to accelerate debt repayment of another $750 million. The
source for the accelerated debt repayment comes from the overseas
sales of some of the government shares in various state-owned
companies and from budget surplus, i.e. revenues which surpassed
the planned expenditures in the previous years. With the
acceleration of debt repayment we can save the payment of
interest later on to the tune of $ 1.45 billion or equivalent to
Rp 3.4 trillion.

With the envisaged domestic revenues and routine expenditures
as I have just explained, the public savings will be close to Rp
26 trillion, which means an increase of around 17 percent from
the current figure.

Public savings are the prime source of our development budget.
As a complement, we receive foreign loan that is utilized
to finance projects which have high-import content. This foreign
loan -- which we refer to as development revenues -- amounts to
Rp13 trillion. Compared to the present one, the increase is quite
small, i.e. less than 5 percent. The total public savings and
foreign loan represents development budget of close to Rp 39
trillion, which means an increase by almost 13 percent from the
current one. During these last three years, the portion of public
savings in the development budget continues to rise; from almost
62 percent in 1995-1996 to 64 percent in 1996-1997, and it will
be more than 66 percent in the coming 1997-1998. This shows our
greater ability to carry out development on our own.

We are aware that the attainment of the goals of Repelita VI
does not all depend on the government. Because a great number of
these goals are determined by the public activities, including
the business community. For example, the non-oil/gas export
growth and the lowering of population growth rate. The government
role here is to provide guidance and stimulus as well as to
create a conducive climate for public activities aimed at
reaching these goals. It is also on this basis that the
government adopts investment policies, whether for human
resources development, economic infrastructure or institutional
development.

Most of the development budget is allocated for the regions,
that comprise of Inpres funds as well as land and building tax.
The budget reaches close to Rp 10 trillion, which means 38
percent of the overall development budget. From this amount, the
Inpres funds have increased quite substantially, i.e. more than
Rp 1.2 trillion in comparison with the current year.

The increase of Inpres funds is attributed to a number of
reasons. Firstly, the increased assistance to the on-going
activities, whether in its values, size and scope. Secondly,
several activities -- which have so far been handled on the
central level through sectoral budget -- now become the
responsibility of the regions. Thirdly, there are new
undertakings in the respective Inpres programs. There is even a
new Inpres, namely: Food Supplement Program for School Children.

The Inpres programs are an essential and strategic element for
the equitable distribution of development and, at the same time,
assist regional development. Together with Land and Building Tax,
the Inpres funds are an essential component of the regional
revenues and expenditures, both of the Level-I and Level-II
Regions. In fact, for the nine provinces -- or one-third of all
our provinces -- the funds from the central government which were
managed by the regions during 1996-1997 amounted to more than
half of their regional budgets.

We are aware of the importance of childhood, the growing-up
period of children, for their intelligence and health until they
reach adulthood. The nutrition and health standard during the
growing-up period is extremely crucial for the quality of
Indonesia's human resources in the future.

Based on this consideration, the food supplement program for
school children was initiated in 1995-1996 on a small scale as a
pioneering project. In 1996-1997, this program was continued as
one of the activities of the health Inpres. In that year, the
target of the program was to cover over 18,000 elementary schools
and Islamic elementary schools located in more than the 14,000
villages under the Least-Developed Village Inpres (IDT) and
covered in excess of 2.3 million school children.

This program has apparently been very successful. The result
of a survey showed that the physical condition and the desire to
learn of these children have improved. In addition, the economy
of the village where this program is being carried out has also
improved as a result of the marketing of the increased local
products due to -- among other things -- the IDT program.

Based on this, the scope of this program has been expanded and
also for this reason that it is being coordinated by a special
Inpres. This Inpres program will cover all villages that receive
IDT assistance, numbering more than 280,000; with a budget of
Rp265 billion.

The number of school children who will receive food supplement
increases more than three times, i.e. 7.4 million children
attending well over 49,000 elementary schools and Islamic
elementary schools, both public and private. In addition to the
three times a week food supplement, all school children are also
given medicine against worm every six months. Clean water will
also be provided together with this program to elementary schools
and Islamic elementary schools, through the Level-II Region
Inpres. Thus, all efforts are being made to improve the health
and nutrition standards of our school children from the most
basic level. All of this is an essential step to build a skillful
and healthy individual for development in the future.

We hope that depending on state finances, this program may
gradually cover all pupils of elementary schools and Islamic
elementary schools all over Indonesia, with a total of almost 30
million children today.

Although the Food supplement Program for School Children is no
longer a part of the Health Inpres, the funds for the latter,
however, has increased quite significantly, i.e. almost 16
percent or amounting to more than Rp 600 billion. This increase
includes the transfer of activities which were originally carried
out by the central government to the local authorities, such as
medical aid to the public. This medical aid is intended to combat
wide-spread diseases in the community, such as lung tuberculosis,
malaria, and vitamin-A and iodine deficiencies. Disease
prevention efforts are also being carried out by providing
various vaccines. For example, just to prevent type B hepatitis,
vaccines will have to be provided for 4.6 million babies, that
will cover most of the babies who will be born next year.

Furthermore, the public health service network will continue
to be upgraded. Public health centers and auxiliary health
centers will be reinforced. The number of village midwives, who
are already available in almost every village all over Indonesia,
will be increased. Health services network -- particularly on the
lowest level, that are directly related to the community in the
rural areas and hinterlands -- will have a primary attention.

These two Inpres programs -- together with Elementary School
Inpres -- are parts of the fundamental strategy for the expanded
and equitable human resources development. Funds for Elementary
School Inpres are earmarked to the tune of over Rp 660 billion,
which means an increase of around 11 percent. The funds for
Elementary School Inpres are not all covered by this Inpres,
because a part of them are covered by the Level-II Region Inpres.
As a consequence, the total funds as well as its increase are far
bigger.

Furthermore, we will continue with the IDT program, although
the formerly least-developed villages have received assistance as
planned, namely three times of Rp 20 million each.

However, starting with the current fiscal year, all villages
in the East Nusa Tenggara, East Timor, the Moluccas and Irian
Jaya provinces and isolated regencies namely Sangihe Talaud,
Lubuk Banggai, Riau Islands and Nias will also receive IDT
assistance. So that IDT funds for the next fiscal year will be
allocated to villages in these regions. The number of villages
that must still be assisted is more than 6500 and the funds
allocated are close to RP 130 billion.

In the IDT program for 1997/98, there is a new component which
has to date been accommodated in the sectoral budget, i.e. the
development of rural infrastructure, This will be financed from
various sources, namely : state budget and assistance from the
World Bank, the Asian Development Bank and the Government of
Japan.

The development of rural infrastructure is aimed at breaking
the isolation that caused these villages to become least-
developed because of the non-existence or scarcity of
infrastructure. We plan that by the end of Repelita VI, all
villages will have their infrastructure, so as to reduce the
impediments that cause poverty. Basically speaking, the
development of rural infrastructure is carried out by the rural
population themselves under the guidance of the technical
authorities concerned.

With these programs, the funds for IDT next year will be Rp
480 billion.

The IDT program can not be detached from the overall rural
development which is aimed at ensuring that the rural population
will not be lagging farther behind an that they can follow the
development drive in line with the increasingly fast tempo. In
this connection, the Village Inpres is still essential. For the
coming year, there will be additional assistance to help the poor
community in the village. The Village Inpres is envisaged to
reach more than Rp 460 billion.

Obviously, , rural development does not only rely on IDT
program and Village Inpres. Because many other activities in
various sectors are also taking place in the rural areas; such as
development in the agricultural field and all the activities of
other sectors that sustain it.

Furthermore, the Level-II Region Inpres will enjoy the highest
budget increase, i.e. almost 20 percent. The amount reaches to
almost Rp 3,.5 trillion. Its portion in the overall Inpres funds
is also the biggest, namely : around 45 percent. This reflects
our intention to make Level-II Region as the central point of
regional autonomy.

A substantial increase is also expected of the funds for
Level-I Region Inpres. The total budget will be almost Rp 1.7
trillion or an increase of close to 17 percent of the current
budget.

The overall development budget increase by almost 13 percent.

The sector which has the highest increase is Population and
Prosperous Family, namely more than 110 percent. The total budget
amounts to around Rp 690 billion. The increase is needed to
expedite poverty alleviation by the prosperous family approach to
be applied in villages outside the IDT. The Government provides a
budget of Rp 300 billion as revolving capital that will
complement the funds collected from the public. In addition, the
effort to control the population through the family planning
program will continue to halve priority, because it is very
essential to ensure the success of development as a whole.

The second highest rise is in the Political, Foreign
Relations, Information, Communications and Mass media sector. It
will be mainly used to support activities related to the next
general election and the General Assembly 0of the People's
Congress. The increase is around 56 percent, so the budget
allocated for this sector will be about Rp 286 billion.

The third biggest increase is in the sector that covers health
and social areas, with an increase of around 53 percent. The
budget for the Social Welfare, Health, Role of Women, Child and
Youth sector is planned to reach more that Rp 2 trillion. The
largest increase is in the women, child and youth sub-sector,
i.e. by 237 percent.

From this total, the largest budget is reserved for the
development of the Health sub-sector, with a budget of Rp 1.5
trillion. Some of them -- about one third -- is directly
channeled to all over the regions through the Health Inpres. The
rest, among others, is for the improvement of the quality of
services in the hospitals and for the construction of new
hospitals and for the improvement of hospitals in Level-II
Regions, especially isolated regions such as in provinces in the
eastern part of Indonesia.

The fourth largest increase of budget is in the Manpower
sector, namely 44 percent The budget will reach close to Rp 270
billion. It will mainly be used to intensify trainings aimed at
overcoming the problem of unemployment.

The sector of Trade, National Business Promotion, Finance and
Cooperatives will get a budget of over Rp 550 billion. This
sector has the fifth highest increase, i.e. 37 percent. This
increase is for the promotion of non-oil/gas export and
development of small enterprises and cooperatives. The funds from
the development budget to develop small enterprises and
cooperatives are just a part of the available resources for this
sector. Apart from the state budget, for the promotion of small
and medium enterprises there are other credit lines, partnership
funds from big businessmen and funds from 1 to 5 percent of the
profits of State-owned Companies. Moreover, the government
procurement must also become the source of the promotion of small
and medium enterprises, especially in the provision of goods and
service which do not require a really high technology and the
volume of which is not too large.

The sector that has a budget with a substantial increase is
Education -- including the National Culture, Belief in the One
and Only God, Youth and Sports -- with a budget amounting to
almost Rp 4.7 trillion. This is more or less 12 percent of the
overall development budget.

Some of the activities of this sector are covered by the
various Inpres programs I explained earlier. The priority of the
educational field is to continue the nine-year compulsory basic
education. Others are for the expansion and improvement of
vocational education and the improvement of the quality of
education in all types, levels and disciplines, including higher
education. Greater attention will be given to the iprovement of
the quality of teachers at all levels of education.

The budget for the industrial sector is planned for almost Rp
590 billion. Including the support to various industrial
activities as the prime source of the national economic growth,
among other things through the upgrading of the technological,
research and training skills.

The Agricultural sector -- including forestry -- has a budget
off more than Rp 1.5 trillion. It will be mainly used to
consolidate food self-sufficiency, raise the competitive edge of
various profitable agricultural commodities and alleviate poverty
in the rural areas.

Furthermore, the irrigation sector will get a budget in excess
of Rp 2.6 trillion or an increase3e by almost 14 percent. About
38 percent of this budget will be used to develop the eastern
part of Indonesia.

The Transportation sector -- including meteorology and
geophysics -- will have a budget of more than Rp 6.8 trillion.
Around 2/3 of this budget will be used to build road
infrastructure. Most of it will be for upgrading road
infrastructure outside Java, which are mostly located in the
eastern part of Indonesia.

Also in the sea communication area, there are plans to build
and rehabilitate wharves in 47 locations, where 32 locations are
in the eastern part of Indonesia. Subsidies will continue to be
provided for the operation of 39 pioneer ships. In the air
communication field, 16 airports will be expanded and
construction of the 3 pioneer airports in 3 locations will be
continued.

The Mining and Energy sector has a budget of a little over Rp
4.4 trillion. Almost all of it is concentrated on the energy sub-
sector, especially to support power generation, among others for
rural electrification. In 1997/98, more than 5200 villages will
have electricity. Thus, since the First 25-Year Long-Term
Development program, more than 47,000 villages have enjoyed
electricity; or three-fourths of villages all over the country.

The Tourism, Post and Telecommunications sector has a budget
of more than Rp 960 billion. As a whole, the budget for this
sector declines because of the reduced budget for the post and
telecommunications sub-sector. The reduced budged is caused by
the greater participation of the public in the development of
this sub-sector and the diminishing amount of foreign aid.
However, the budget for the tourism sub-sector increases quite
significantly, i.e. 34 percent. It is intended to support tourism
development as a source of employment opportunities and the
extremely important foreign exchange earnings.

Other activities in this sector are to raise the capacity of
the postal and giro services which are supported by a network of
post offices and auxiliary post offices and a network of mobile
urban and rural post office. In 1997-1998, the government will
allocate budget for the installment of new telephone lines
totaling 700,000 units, including rural telecommunications and
the construction of telecommunication transmission network to
increase communication between the various regions in Indonesia.

In the Rural development sector -- including transmigration --
a budget of almost Rp 7.2 trillion is available. This sector gets
the biggest development budget. Some of the activities of this
sector has already been covered by Inpres programs.

In the rural development, we pay our primary attention to the
effort to stimulate growth in the least-developed areas. Rural
development must be carried out through planning and with
guidance so that the limited funds can be used as well as
possible. For this purpose, new growth-potential areas must be
developed.

The next sector is the Environment -- including spatial
planning -- which will have a budget of around Rp 680 billion. It
will be used, among other things, for the empowerment of state
apparatuses both at the central and regional levels to protect
the environment and control the impact of development on the
environment. In addition, the scope of activities will also be
continued and expanded for the rehabilitation of critical lands,
replantation and reforestation which are covered by various
Inpres programs.

Next, the Housing and Settlement sector will have a budget of
over Rp 1.5 trillion. It is made available for, among other
things, supporting the construction of 110,000 simple and very
simple houses. It is also allocated for the expansion of clean
water provision for 6 million inhabitants in the rural and urban
areas and the improvement of housing complexes particularly in
the urban areas.

The Religion sector has a budget of Rp 300 billion. This
sector has always received attention because of its important
role in development, among others, in the nine-year basic
educational programs with the Islamic elementary and secondary
schools.

The Science and Technology sector receives a budget exceeding
Rp 880 billion. The program will include, among other things,
development of the capacity of research sources, inclusive
development of research means and infrastructure and
technological services.

The Law sector will have a budget of Rp 195 billion. A great
attention is being given to this sector and for this reason its
development budget continues to rise. Hopefully, with this
continuously bigger budget, it can carry out its function and
role as a means to ensure law and order and well-being, as well
as a means to build a society imbued with justice.

The State Apparatus and Supervision sector has a budget of Rp
911 billion. It will be used to improve services of state
apparatus to the public, enhance the ability to manage public
administration and development as well as to encourage, guide and
sustain development which is being carried out by the people.

The last sector is Defense and Security, with a budget of more
than Rp 1.7 trillion. The priority of the development of defense
and security is to improve the human resources quality, and in
stages modernize and provide equipments to units which have not
yet met the minimum standard.

We are also drafting the 1997/98 State Budget with a view to
preparing ourselves in facing this future, by reaching for the
common goals we agreed on in the 1993 Guidelines of State Policy
and Repelita VI. We are confident these development goals will be
attained, because we have achieved significant progress in
development, and this makes us quite dependable to embark on the
future.

However, this does not mean that all the problems are solved.

We still have the problems of the gap between sectors, gap
between regions and gap between group in the society. Almost
every nation has this experience in its initial stages of
development. We have been able to address them in stages and with
planning and it has started to produce some results.

The number of our poor population has dropped drastically.
Economic powers have emerged in our society, so that we have
greater strength to bear the also increasingly heavy development
burdens.

However, we can not wait until poverty is completely
alleviated and all gaps disappear, before we continue to reach
for economic growth. If we follow this path, we will then be
lagging farther behind from the progress of times. This is what
we are pursuing: we try to reach economic growth and, at the same
time, reduce the gaps and poverty.

We do not need to hide the existing shortcoming and gaps.
Everybody is free to observe, study, discuss and offer a solution
to these shortcomings and gaps. We all precisely need clear,
impartial and constructive observation and ideas to address this
sensitive issue.

The government will continue to seriously take into
consideration every clear idea, concept and program to overcome
this problem.

However, what we have been hearing often lately is the very
unbalanced scrutiny over these shortcomings and gaps. As if there
were no progress in addressing the shortcomings and as if the
gaps were allowed to become even wider.

Let us not just talk about the gaps and poverty, even worse if
it is just aimed at achieving the political goal of a group or at
gaining personal popularity. This is definitely unproductive.

Continuing to blow up the issues of the gaps and poverty
without offering any realistic concept for solving them may
provoke the sensitivity of our diverse community. Sometimes this
sensitivity -- without knowing the original causes -- may lead to
riots and destruction of the economic facilities and social
foundation. Thousands of employees and workers suddenly loose
their sources of income. We have experienced this several times
during these last few years. This has been an experience that
caused very great concern. Such a bitter experience must not
happen again.

The press and prominent leaders of the community can play a
pivotal role in mobilizing public attention towards more
productive things, restrain the emotion and encourage a clearer
perception. A coverage that mixes the views of public leaders
both formal and informal -- or expose differences of opinion,
will only confuse the people at large and they will loose their
own self-confidence. In such a situation, groups in the society
will easily be instigated to become emotional and commit acts
which are damaging to the nation as a whole.

Development is a change towards progress. It is a continuous
reform. The deregulation and debureaucratization are concrete
manifestations of the government's determination to make from and
encourage the emergence of public initiative and creativity.

A change is completely different from chaos. What we need is a
planned, orderly and peaceful change. The 1945 Constitution
provides the means for it.

Other issues that can easily incite the emotion are
corruption, collusion and manipulation. The government is fully
aware of the danger of these issues. The Government and law
enforcement agencies will continue to take firm action to
eliminate all the malfeances. We have even set up special
institutions to protect the people from the unscrupulous deeds of
government personnel, we already have a State Administrative
Court.

In order to protect the people against violation of their
fundamental rights and the improve the quality of these rights,
we have established a National Human Rights Commission.

Enforcing the law, refreshing democratic life and respecting
human rights need a process. It is a simultaneous and planned
process, both by government personnel and the public themselves.

In the coming years, we must intensify the activities to
enforce the law, refresh democratic life and respect human
rights. To achieve the greatest impact, we have to facilitate the
process of political communication between the government
personnel and community leaders. The goal we want to reach is the
optimum readiness of our nation to confront the challenges of the
coming 21st century. We are in the path and process towards
improvement.

Window A: Therefore, we have to prevent general election from
becoming the contrary, namely creating anxiety and sufferings of
the people.

Window B: For this reason, as a nation we must always remain
solidly united, so that we can concentrate our attention and
energy to face the future which is full of challenges.