RI policy commended
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.