RI, Australia agree on priorities reconstruction fund

RI, Australia agree on priorities reconstruction fund

Urip Hudiono, The Jakarta Post, Jakarta

Indonesia and Australia have agreed on how the A$1 billion (some
US$806 million) in aid funds will be used in financing
reconstruction projects in disaster-affected areas.

In addition to the agreement, Indonesia has also laid the
foundations for a stronger economic partnership with Australia in
support its intention of becoming a center of economic growth in
the Southeast Asian region.

State Minister of National Development Planning Sri Mulyani
Indrawati said on Monday that both countries have agreed to
cooperate in prioritizing the financing of reconstruction
projects.

"For Nanggroe Aceh Darussalam and North Sumatra's Nias island,
Australia will disburse A$50 million to finance several
projects," she said. "Among them is the rehabilitation of Zainoel
Abidin General Hospital in Banda Aceh."

Australia has pledged to donate A$1 billion to Indonesia --
consisting of A$500 million in grants and another A$500 million
in 40-year, zero-interest loans -- to help finance the
reconstruction of Aceh and North Sumatra.

The earthquake and tsunami on Dec. 26 devastated
infrastructure in both provinces and claimed more than 230,000
lives.

Mulyani, Coordinating Minister for the Economy Aburizal Bakrie
and Minister of Trade Mari E. Pangestu visited Australia last
week to talk about the aid funds and about how to strengthen the
economic partnership between the countries.

The government has estimated that the financial needs for
Aceh's reconstruction will be around Rp 45 trillion (US$4.8
billion) over the next five years.

Mulyani said the agreement was important to show the growing
partnership between Indonesia and Australia, as usually donor
countries would determine themselves which projects would be
financed by their aid funds and who would implement them.

"The agreement means that projects financed by the fund will
not only benefit Australian companies, but will also benefit
Indonesian companies," she said. "Even local Acehnese companies
are welcome to participate in the reconstruction projects."

But she emphasized that the funds would not be used for
reconstruction projects in Aceh alone, as Australia had asked
that funds also be used for reconstruction projects in other
disaster-affected areas in Indonesia.

"Funds will also be disbursed for projects in Nabire and
Alor," she said. "Australia has been interested in disbursing a
portion of the funds to capacity development programs and to
support economic reform in Indonesia."

Earthquakes devastated Nabire in Papua and Alor island in East
Nusa Tenggara last year.

Meanwhile, Aburizal said Australia had also agreed to upgrade
its bilateral partnership with Indonesia, including establishing
a better understanding between the two in political, economic and
security affairs.

"In the economic sector, Australia will increase its
investment in Indonesia, particularly in tourism," he said,
without elaborating.

Aburizal explained the recent talks with Australia would be
part of the government's larger framework of establishing
economic partnerships with other countries in the region.

"Besides Australia to the south, Indonesia -- along with ASEAN
-- will also engage in similar partnerships to the west with
India," he said, explaining that if Indonesia only focused on
partnerships to the north such as with Japan, China and Korea,
then it would possibly become marginalized in the region.