RI policy commended
World Bank President James Wolfensohn's high praise on Monday for Indonesia's economic growth pattern as a model for developing countries was not meant to be a diplomatic nicety. He simply reiterated the results of the overall assessment of Indonesia's economy by the Washington-based multilateral development bank. Certainly the World Bank, with a large office here, is the most seasoned, independent analyst of the country's economy.
Indonesia has always been under the organization's tight scrutiny because the country is one of its largest borrowers. Moreover, the World Bank is the opinion leader for and chair of Indonesia's creditor consortium, the Consultative Group on Indonesia which meets annually in Paris.
Wolfensohn's remarks at the Indonesia Summit hailed the government's prudent macroeconomic management because it is strongly based on the policy fundamentals which the World Bank has always prescribed for developing nations. He greatly endorsed Indonesia's policy, which emphasizes human resources, basic infrastructures, the financial system and the environment.
Indonesia's macroeconomic policies -- notably after the start of the massive economic and bureaucratic reform process in May 1985 -- have indeed succeeded in fueling a steady, robust growth of the economy. The series of deregulation measures taken over the last decade have significantly improved the business climate. The private sector has now become the locomotive of economic expansion.
Nonetheless, let us not be lulled into complacency by the international praise. The occurrence of poverty, though already sharply reduced, remains high and the number of people living on the verge of poverty is still large. The gap between rich and poor is tending to widen. The rates of unemployment and under- employment are very high. More worrisome, too, is the increasing number of high school and university graduates among the unemployed's ranks. The disparity in the stages of development between the eastern and western parts of the country is striking. The dramatic progress in mass communications due to rapid developments in telecommunications has steadily raised the people's aspirations. The patience of those who remain outside the economic mainstream is being stretched to its limits.
As the country increasingly interlinks itself with the global economy, the challenges for both policymakers and the business community have become tougher. Even the slightest mistake or policy inconsistency in some sectors could result in a severe punishment by market forces.
Among the biggest challenges is the slow pace of bureaucratic reform, which has often impeded the implementation of economic reform measures. In fact, bureaucratic procedures and regulatory requirements in Indonesia have now been singled out as one of the largest barriers to efficient, smooth investment operations. Many are afraid that Indonesia could be the loser within the ASEAN Free Trade Area in 2003 if the bureaucratic hurdles were not sharply reduced.
We should therefore take the international praise of our impressive economic performance as a measure of confidence building to help us in facing bigger future challenges.