Soeharto unveils 1996-1997 draft state budget

Soeharto unveils 1996-1997 draft state budget

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

JAKARTA: Our nation embarked on the year 1996 with the year 1995 that we have safely passed as an asset. Last year had a special significance to our nation. It was a year full of dynamism at home, in the region and the world.

In 1995, our national independence became half a century old. We are gratified by all the blessings of our independence, because we were able to consolidate the national unity and cohesion with such a diverse society, to preserve our national sovereignty of an extremely vast archipelago, to successfully carry out development that brought about significant progress and improved the people's well-being.

Despite the continued solid political stability, it was very discernible, however, that the political dynamism was quite high. The climate of openness, freedom and new ideas continued to flourish. I have reminded that development progress breeds new aspirations, new strengths and new hopes. What is important is our awareness and ability to preserve together the situation from going out of control. Any kind of dynamism is a positive sign in order to continue to refresh our nation by subscribing constantly to Pancasila, the 1945 Constitution, the Guidelines of State Policy and ensuring stronger national unity and cohesion.

The regional developments are heartening. ASEAN becomes increasingly solid and its membership has been enlarged. This means providing a greater elbow-room for economic cooperation with a view to improving the well-being of the peoples in this region. Our relationship with neighboring countries in the Southwestern Pacific also becomes increasingly closer. An expanded cooperation within the framework of APEC opens new opportunities. All of this creates a favorable atmosphere to our development.

Developments on the global level are also moving towards peace and economic cooperation. New hopes for peace emerge in the Balkans and the Middle East.

Thus, Honorable Speaker, we have ended the year 1995, thank God, by achieving an encouraging progress.

As I have presented in my address of State of Aug. 16 last year, we have revised the growth target in the Sixth Five-Year Development Plan (REPELITA VI), from an annual average of 6.2 percent to 7.1 percent. In 1994, this new target was surpassed, because the economic growth reached 7.5 percent. Our economic growth in 1995 will also be higher than the set target and we predict it will be at least equal to 1994.

Such an adequately high economic growth was mainly attributed to the growth in the non-oil/gas sector, including the industrial sector. The agricultural sector is estimated to surpass by far the growth rate of 1994. This means the standard of prosperity of farmers is also improving.

The macro economic policy we have been pursuing over the last few years has brought confidence is Indonesia's future economy. One of its manifestations is the tremendous surge of approved investments, both domestic and foreign, which will serve as the basic of our economic growth in the years to come.

The evolution of the capital market in 1995 has also been heartening which, at the same time, shows the trust of investors in our economy.

However, this does not mean that our economic growth is not without problems.

Among the three elements of the Trilogy of Development, the element of growth and equitable distribution has shown a remarkable result. However, the element of economic stability encountered a difficult challenge. Unless we deal with it properly, this challenge may develop into an economic upheaval that will have a far-reaching impact on growth and equitable distribution.

The challenge to Indonesia's economic stability today is an overheating of the economy. There are two symptoms. The first, for three conservative years the inflation rate has been far above 5 percent, higher than the target set for REPELITA VI. In fact, it has been even higher compared to the inflation rate of our neighboring countries. The second symptom is the growing current account deficit in 1995-1996, much higher than the previous prediction. The growing current account deficit of the balance of payments is caused by the increase rate of import which was much higher than the increase rate of export. What we have to be watchful of is the impact on the balance of payments of foreign commercial loan, especially short-term, by the business sector which has increased quite substantially in 1995. We are a bit relieved, however, that our foreign exchange reserves have also risen and are sufficient to sustain the import need for five months.

For this reason, therefore, in 1996 we must exercise greater control over the inflation rate. The government has initiated to launch synchronized and harmonized policies in the fiscal and monetary sectors, as well as in the real sector.

The current account deficit problem is a general symptom in a dynamic economy which has a high growth potential. However, if the current account deficit quickly becomes higher, it is necessary to take appropriate measures immediately. One of the essential keys to overcome the current account deficit is, on the one hand, to boost the non-oil/gas export and, on the other hand, reduce the growth rate of import. Based on this consideration, I have combined the Ministry of Industry and the Ministry of Trade into one ministry. Hopefully with these measures our effort to increase export will have a better direction and coordination. Our action in international market will be more agile and highly responsive to global economic developments and capable of seizing every opportunity.

With an open economy and the principle of a market economy, indeed we cannot just prevent import. What we must do is to see to it that import sustains export, creates the widest possible employment opportunities and raises the highest possible value- added.

In dealing with the overheating of the economy, it is necessary to take a series of effective measures to cool the economy down. These measures are mainly aimed at limiting the liquidity expansion in the economy and banking credit, which have of late grown too fast. In this connection, a number of measures have been adopted in the monetary field, i.e. the increase of bank reserves requirements, supervision over non-bank financial institutions and the widening of intervention band. Steps have been taken in the financial sector to expedite the repayment of external debt by using the funds collected from the sale of stocks of state-owned companies in the international capital market.

The effort to expedite the repayment of external debt is vitally important. Therefore, should there be a budget surplus by the end of the fiscal year, it must be used to speed up the repayment of external debt, especially for those with a high interest rate.

Furthermore, to safeguard the balance of payments, the borrowing of foreign commercial and export credit must be limited and well-coordinated, especially for projects that are directly or indirectly related to the government and state-owned companies.

Apart from the short-term agenda to cool the economy down, another no less important agenda is preparing the national potential before entering the 21st century that will soon come.

Along with the globalization process and the increasingly effective new international trading order, the flow of goods and services between nations will continue to rise.

However, the competition between nations will also become fiercer. Not only in the domination of export market and control over domestic market, but also in the fight for the various scarce resources.

In this process, our national economy will become more integrated into the global economy. The competition will no longer be between nations but between entrepreneurs all over the world.

Apart from economic globalization, other tendencies taking place today is the increased economic cooperation in various regions. The European Community and North American countries has developed it. We too, in ASEAN, have long established economic cooperation aimed at creating an ASEAN free trade area or AFTA.

In a wider area, the Asia Pacific countries have agreed to establish cooperation within APEC. The second APEC economic leaders' summit in Bogor has produced a concord known as the "Bogor Declaration". They met again recently in Osaka, Japan; and reaffirmed their commitment to implement the Bogor Declaration.

Indonesia will not wait until the year 2020 to start its free trade. We have started long ago to make preparations by carrying out deregulation that begun with the banking sector back in 1983. Last year we have launched again another series of very comprehensive and far-reaching trade and investment deregulations. We will continue these efforts. It can be said that Indonesia has taken the initiative to start the process rolling with a view to facilitating the flow of goods and services in our region, preceding the steps of many other countries.

The 1996-1997 Draft State Budget is envisaged to be balanced at the level of Rp 90.6 trillion. From this total, domestic revenues will amount to Rp 78.2 trillion or 86.3 percent of the total state revenues. The balance of Rp 12.4 trillion constitutes development revenues. Routine expenditures are expected to reach Rp 56.1 trillion and development expenditures at Rp 34.5 trillion.

The 1996-1997 Draft State Budget increases by 16.1 percent compared to the 1995-1996 State Budget. With such an increase, private savings amount to over Rp 22 trillion, this means an increase of around Rp 3 trillion or 16 percent compared to the previous year's.

As to revenues, oil/gas revenues amount to Rp 14.1 trillion and non-oil/gas revenues approximately Rp 64.1 trillion. This indicates a stronger domestic revenues structure because the non- oil/gas revenues has risen compared to the 1995-1996 fiscal year.

As a whole, non-oil/gas revenues have risen by higher than 20 percent. The largest source is tax revenues of Rp 56 trillion, which means an increase by around 24 percent.

Starting 1995, we have lowered income tax tariff which, among other things, was intended to raise the competitive edge in order to attract more investment. This lowered tax tariff might have led to the decline of state revenues. However, what really happened was just the opposite. Tax earnings have instead gone up. This shows that despite the lowered tariff, the basis of tax earnings has become broader. This also indicates the people's awareness to fulfill their obligation as good citizens, as tax payers, has improved.

Although it has risen quite substantially, tax earnings must and can be raised even higher. Because we have not yet reached all tax-payers and not everybody who have been targeted duly paid their tax. One of the yardsticks usually used is the ratio between tax earnings and national income. Based on this yardstick, our tax earnings are still low compared to our neighboring countries.

Furthermore, the budget for civil servants, both at the central and regional governments, will be over Rp 27 trillion and it represents almost half of the total routine expenditures. The government realizes that despite such a big budget, the civil servants' salary is very minimal compared to their living needs. This is due to the large number of civil servants working at the central and regional governments, that in the 1995-1996 fiscal year reached over 4.5 million people, inclusive members of the Armed Forces of the Republic of Indonesia (ABRI).

Every civil servant's salary hike has a very great impact on state expenditures, so all aspects must thoroughly be taken into consideration. For this reason, as far as this civil servant's salary is concerned, the government will discuss it with the honorable House to find the best solution during the deliberations of the present 1996-1997 Draft State Budget.

Another major routine expenditures are external debt services, which will reach Rp 19.9 trillion. During the last few years, we have been trying to reduce the external debt burden by expediting the reimbursement of high-interest loans which imposed a heavy burden on state finances. The funds to expedite the repayment of foreign loans are obtained from the stocks of our State-owned companies sold in the international capital markets.

Whereas development budget is targeted at Rp 34.5 trillion. This is about the same amount as the one envisaged for the third year of REPELITA VI. In this development budget, the rupiah finances from private savings will reach 64 percent, an increase of 61.8 percent from the current fiscal year.

In drawing up the development budget, the main guidance was the 1993 Guidelines of State Policy. The most essential of them are, among others:

First, development priorities should be placed in the economic field in tandem with the quality of human resources, in the framework of creating an advanced, self-supporting and prosperous Indonesian individual and society in a harmonious coexistence.

Second, development policy should be based on the Trilogy of Development.

Third, national development is implemented together by the people and the government. The people are the principal players in development and the government is obliged to provide the direction and guidance and create a conductive climate.

The priorities are as follow: first, to promote equitable distribution of development through, among other things, rural development under the mechanism of INPRES*), including the efforts to alleviate the population from poverty; second, to improve the quality of human resources; third, to continue the development of basic economic infrastructure; to sustain development activities undertaken by the community; fourth, to promote institutional development, both state and social institutions.

As I have mentioned above, the drawing up of development budget has also taken into account the international and regional economic developments as well as the rapid changes resulting from technological advancement. Attention was also paid to international agreements that have to be observed in the years to come, such as GATT/WTO, APEC and ASEAN with its AFTA. For this purpose, development in various sectors -- whether economic or human resources -- must be directed towards the establishment of a stronger platform for future development so as to ensure a continued, sustainable and well-maintained economic growth.

Development budget also must not put an additional burden on the current account deficit. This is achieved when the budget is spent on using domestic products. Basically speaking, the need for imported goods is met by utilizing foreign soft-term loan and assistance.

The 1996-1997 development budget is not intended to achieve the same level of increase in all sectors and regions. But all sectors and regions will enjoy increases in the local currency budget.

There are ten sectors that will receive budgets of over Rp 1 trillion: five sectors of them will be higher than Rp 2 trillion, four sectors over Rp 3 trillion and two sectors above Rp 5 trillion. Development activities which will get an allocation of more than Rp 2 trillion are -- in the following order -- transportation; rural development; energy and mining; education ; and irrigation. In addition, development activities which will receive budgets above Rp 1 trillion are defense and security; agriculture; post and telecommunications; health as well as housing and resettlement.

This allocation reflects the development priorities as prescribed by the 1993 Guidelines of State Policy, i.e. in the economic field. Its implementation is directed towards the development of the economic means and infrastructure, and also sectors that deal with human resources. This also illustrates that development endeavors have always been based on the Trilogy of Development. It means that development budget must harmoniously sustain the efforts for equitable distribution, growth and the creation of a sound and dynamic national stability. Sectors which do not get such a big budget do not mean that they are less important, It is only the needs which are different than those which require major physical investment and only the government has the ability or is well-placed to carry them out. On other sectors, the role of the government is more to provide guidance, promotion and creation of a healthy climate.

The development budget allocated is more than Rp 506 billion. The priority is placed in activities which support the growth of small and medium enterprises as an effort for an equitable distribution and, simultaneously, as a source of national economic growth. This will cover, among other things, the upgrading of technological capacities of industry, management and marketing. Thus, our industry will be able to boost export. In addition, it will also sustain the development of strategic industries and the capacities of industrial workshops and other technological research and development institutions in providing technical services and information to the industrial world, as well as vocational training especially for small industries.

The following sector is agriculture and forestry, which will have a budget of close to Rp 1.3 trillion. The agricultural development budget will be more aimed at consolidating food self- sufficiency, raising the productivity of agricultural manpower and alleviate the rural population from poverty. This will include the quality improvement of intensification, development of agribusiness system for various cash crops and the promotion of farmers' groups and joint-enterprises with a view to developing the small-holders economic development in the rural areas.

In the development budget for forestry, the priority is to preserve the ecological function and upgrade the economic and social functions of forests so as to give the greatest possible benefit to the people's well-being.

The development of the irrigation sector will have a budget exceeding Rp 2.3 trillion, including 46 percent of foreign aid. The local currency budget in this sector has risen by almost 42 percent, most of which is for the irrigation sub sector. Most of the activities using the local currency funds are in areas outside Java.

Irrigation development is primarily aimed at sustaining the increase of rice production by, among things, the opening of peat areas for agriculture covering around 1 million hectares in Central Kalimantan.

In addition, funds are also allocated to continue the rehabilitation of rural irrigation in areas covering 350,000 hectares as a follow-up of the effort to rehabilitate rural irrigation so that they can be planted at least twice a year. This is a highly strategic effort because it will not only increase the rice production by using th existing paddy fields and water resources but also raise the farmer's income.

The manpower sector will obtain a development budget the tune of more than Rp 187 billion. It will be mainly used to promote training, prepare skilled workers through institutional training, mobile training and apprenticeship training.

The sector of trade, development of national business, finance and cooperatives will have an allocated development budget higher than Rp 401 billion. This will be used, inter alia, for the effort to promote the role of the domestic market by the creation of a more solid trading pattern and distribution system, as well as the promotion of non-oil/gas export where its structure will be shifting strongly towards export-oriented industrial products.

The promotion of cooperatives and small enterprises is aimed at enhancing the small-holders' economic empowerment in the context of reinforcing the national business order and supporting equitable distribution and sustainable economic growth. Today, we have a law on small enterprise, beside a law on cooperatives and small enterprise, and its promotion has a better direction and its expansion is carried out jointly with the extended involvement of all segments of the society.

In line with the development priority mandated by the Guidelines of State Policy, the development of economic physical infrastructure continues to receive a big budget allocation. It covers communication infrastructure, such as roads and other transportation means and infrastructure.

For this sector the biggest development budget of almost Rp 6.8 trillion is allocated.

The construction of road infrastructure will get the biggest budget of close Rp 4.2 trillion. Around 69 percent of this budget will be used for road infrastructure outside Java. We shall build more than 1,000 kilometers of new roads and 1,100 meters of new bridges. The main purpose is to open isolated areas -- including border areas and transmigration sites --, in addition to sustain development in the rapidly growing areas.

With regard to railways, the activities will cover, among other things, the assembling of electric trains in the framework of the transfer of technology, the continued development of the Cikampek-Cirebon double track and the construction of Citayam- Nambo new rail track. The program of river and lake transportation and crossings will include the provision of fast ferries and continued construction of crossings piers in 30 locations. This budget also covers funds to subsidize the operation of pioneer crossing boats and buses. Most of the activities will be in the Eastern part of Indonesia.

The budget for sea transportation will amount to Rp 745 billion. It will be used, among others, to build piers in 35 locations, where almost all of it is aimed at sustaining the economic activities of the people in isolated areas. Also for the services of small-holders' shipping, namely 24 pioneer ports and 8 small-holders' ports and 3 general harbors. The construction of a container ports in Ujung Pandang, which will be greatly significant for the development of Eastern part of Indonesia, will also commence soon. This budget will also be used to continue the subsidies for the operation of pioneer boats.

In sub-sector of air transportation, more than half of the budget will be used for the construction of various means and infrastructure for airport services. We will expand 19 airports and 6 pioneer airports, as well as the operational expenses of 48 pioneer air routes. The budget will also be used to provide flight safety equipments in the form of flight navigation, telecommunication, electrical and airport safety equipments, including for pioneer airports.

The mining and energy sector will still get an ample budget, i.e. Rp 4.1 trillion. Most of the activities will be in the development of energy, particularly to support the development of power generation.

The responsibility of the State-owned Electric Company (PLN) and the participation of the business community have been intensified in the development of power generation, especially in Java and densely-populated areas. Thus, apart from meeting the need of some of the transmission and distribution in Java, the government support to PLN will be mainly concentrated on areas outside Java and on rural electrification. In the year 1996-1997, there will be an addition of more than 2,800 villages that will get electricity. So that by the end of the third year of REPELITA VI, 67 percent of our villages will have electricity. This is a meaningful step for the equitable distribution and generation of rural economy.

For another energy program, a relatively big investment is reserved for the development of gas, which has not yet been fully used as a domestic energy source. Gas pipes will start to be built, among other things, from South Sumatra to Riau and it will end in Batam. Thus, the use of oil, for the production of steam needed for a more intensive enhanced recovery in the Caltex oil fields in Duri, can be economized. The energy need of Batam will also be meet by gas, which is a clean energy source.

The sector of tourism, post and telecommunications will get a budget of Rp 1 trillion, most of which is funded by foreign aid. The biggest portion is for the development of post and telecommunications, especially to expand the range of telecommunications services. This budget includes the 700,00 additional telephone lines to expand its range down to the rural areas. Activities in the tourism sub sector will be mainly aimed at intensifying the promotion both at home and abroad, as well as improving the quality of tourism products and services.

Rural development has always received priority and a big budget. Through various INPRES funds and Land and Building Tax, around 38 percent of the rupiah budget -- or Rp 8.5 trillion -- will be remitted to the regions to help rural development. INPRES funds and those from the Land and Building Tax remain an important component of the rural budget, whether in the level-I region, level-II region or villages.

Whereas the budget for rural development and transmigration is planned to reach approximately Rp 6.5 trillion.

The principal rural development programs will be carried out through four INPRES programs, i.e. Level-I Region INPRES, Level- II Region INPRES, Village INPRES and Least-Developed Village INPRES (IDT).

From the outset, these INPRES programs are intended to equitably distribute development. At the same time, they are also designed to alleviate th population from poverty and to improve the quality of human resources, particularly the lowest segment of the society.

The Level-I Region INPRES will amount Rp 1.4 trillion or an increase by over 11 percent than the current one. This increase is mainly attributed to the increased assistance which is based on the size per square of the area, namely from Rp 60,000 to Rp 70,000 per square kilometer. Although all provinces are enjoying this increase, but those which have large areas will benefit most and they are generally located in the Eastern part of Indonesia.

The Level-II Region INPRES will have a higher increase, namely around 15 percent, to become more than Rp 2.9 trillion. The criteria for the per-capita assistance is also raised from Rp 5,000 to Rp 5,500. Also the assistance based on the size of the area in augmented from Rp 20,000 to Rp 25,000 per square kilometer. Assistance to regencies with islands is raised from Rp 5.1 million to Rp 6.5 million per island that has a permanent population. These increases are very useful to sparsely populated regions but have a large area or islands.

In the Level-II Region INPRES there are some additional activities which initially were the responsibility of the sectoral authority in the central government. The transfer of responsibility and, at the same time, the funding demonstrate the greater trust the central government has in the ability of the regional government to carry out activities which so far have been carried out at the departmental level or sectoral institution.

The activity which will be transferred is the construction of feeder or rural axis roads. Under this program, 600 kilometers of rural axis roads will be built. The construction of these rural roads will be primarily concentrated on the least-developed villages, since their under-development is mostly caused by the isolated.. Furthermore, there will also be funds made available for extension field workers who have a very strategic task as the spearheads in the field, in the effort to maintain and consolidate food self-sufficiency.

A new component in this Level-II Region INPRES is the assistance for sub districts, i.e. to enhance the planning abilities and supervision of development implementation at the sub district level. At the same time, it is also aimed at making a more effective coordination of development in the villages of the same sub district. For this purpose, each sub district will have funds amounting to Rp 2 million.

The Village INPRES is also increased, especially with the additional assistance for each village to the tune Rp 500,000, so that each village will receive an assistance totaling Rp 6.5 million. The additional assistance will all be given to the Family Welfare Promotion (PKK)*), which eventually has the responsibility over the promotion of children and teens in the village concerned. Thus, the funds for rural development of Rp 5 million as a direct assistance managed by the community within the Village Resilience Council and for PKK -- including the promotion of children and teens -- will be Rp 1.5 million. In the Village INPRES, a budget for the promotion of the rural community is also provided, including training and consolidation of the Village Council and Village Resilience Council as well as the enhancement of development potential at the village level. In the context of rural development, the youth in the village is encouraged to play an active role in the activities conducted by the Village Resilience Council. As a whole, the available funds for the Village INPRES are more than Rp 459 billion.

The year 1996-1997 is the third year of the IDT program. For this year, only villages which have a population of over 100 heads of family still receive assistance. Villages with a population under 50 heads of family have received an assistance once, while those with a population between 50-100 heads of family have received assistance twice. However, the IDT program for 1996-1997 will also include villages outside the least- developed ones in the provinces of East Timor, East Nusa Tenggara, the Mollucas and Irian Jaya. This is aimed at expediting poverty alleviation of the people in these areas. Furthermore, there are a number of level-II regions where all its villages receives IDT funds, namely: Sangihe Talaud Regency in North Sulawesi, Riau Islands in Riau, Nias in North Sumatra and Banggai in Central Sulawesi. The areas of all the Regency consist of islands.

Thus, villages that get IDT funds will be more than 22,000. For this purpose, the IDT budget is envisaged to reach almost Rp 480 billion. As a whole, during the three years since the IDT program was launched in the first year of the current REPELITA VI, villages that receive assistance for poverty alleviation will be more than 28,000 villages or about 44 percent of the total number of our villages.

The poor people in the villages outside the IDT will gradually be managed under the family welfare savings program or it will be called TAKESRA. Under this program, the better-off members of the society are invited to participate in the poverty alleviation. Thus, the poverty alleviation will truly become a movement by the whole community inspired by social solidarity. This shall reinforce the spirit of unity and cohesion, as a strong foundation for development, which is the practical application of Pancasila.

Furthermore, the activities of transmigration and resettlement of forest squatters will cover the opening of 204 housing units for 55,000 heads of transmigrant family, services for 35,000 heads of family of self-motivated transmigrants. The promotion of transmigrants at the sites will also be continued, for instance in the cooperatives, farmers work and social public services.

For the sector of the environment and spatial planning, a budget exceeding Rp 615 billion is allocated. This is quite a significant increase in the framework of protecting nature from destruction and preserving its function.

With regard to spatial planning, the problems we face are, on the one hand, the limited space as an obstacle to development --in fact, it is the cause of social tension-- while, on the other hand, there are still areas which have not yet been fully utilized. Because of this, spatial planning and land management will become more important in the years to come. In this connection, we have to encourage the relocation of production activities to other regions outside Java and densely-populated areas. This is extremely important, not only for the preservation of social and environmental harmony, but also to strike a better balance of the level of progress and growth between regions. We must also seriously protect fertile agricultural lands, especially those with technical irrigation, from being used for activities except agriculture.

Next, very essential in the effort to develop human resources is educational development. It also includes national culture, belief in the One and Only God, youth and sports. Its development budget is planned to be close to Rp 4 trillion. In this sector, the most fundamental educational activities are carried out through programs under the Primary School INPRES.

The primary School INPRES has a budget exceeding Rp 595 billion, it is quite a meaningful increase, i.e. around 19 percent.

There is a big increase in the provision of books, both text and reading books. The demand for Primary School text books in REPELITA VI will be more than 212 million. Until the second year of REPELITA VI, around 88 million books have been provided. The rest will be provided in the next two fiscal years. In 1996-1997, funds are made available for the provision of over 80 million books, consisting of around 62 million text books and 18 million reading books.

Also will be intensified the refresher courses and the equivalence to Diploma-II program for religious and class teachers, numbering 241,000 teachers . It includes the equivalence to Diploma-II for 108,000 religious teachers and 121,000 class teachers and other refresher courses for 12,000 class teachers. This is an important and strategic activity with a view to improving the quality of learning and teaching at an educational level that serves as the basis for further education.

Beside the Primary School INPRES program, priority is placed in the educational development in order to support and facilitate the implementation of the nine-year compulsory education. In addition, the expansion and improvement of vocational training are also continued and the enhancement of educational quality in all types, levels and paths of education. Among other things, fellowships will be granted to those who have potential but their family is poor. The number will reach 107,000 students. The quality of higher education will be constantly improved through the amelioration of educational facilities, including laboratory equipments and library books, as well as expanded research activities in universities. It also includes the educational cost of 6,600 lecturers for Master and 1.040 lecturers for Doctorate degrees.

The sector of population and contended family receives a budget of around Rp 328 billion, which is intended for the continued control of population growth through the family planning program. It covers activities to develop information and population statistics in the context of improving population data, contended family mapping and various education and training programs.

The sector of social, health, women's role, children and the teens will have a budget of close to Rp 1.4 trillion. Most of this sectors budget is for health development.

Public health services program is mostly channeled through the Health INPRES. A budget to the tune of about Rp 525 billion is set aside for this sector, quite a meaningful increase compared to the current one. One of the components that enjoys an increase is assistance for medicine, where the per unit is raised from Rp 775 to Rp 800 for every individual.

In the Health INPRES program, the assignment of doctors, midwives and other medical personnel to regions all over the country, will be continued. This year, 13,000 midwives will be assigned. This way, all the need for rural midwives will be fulfilled, totaling 54,000 persons. They are given assistance in the form of rural maternity wards -- while at the same time serve as boarding houses for the midwives -- and equipments for them.

The budget for health services in the isolated areas in increased very substantially, i.e. around 133 percent, especially for the assignment of health personnel to areas that do not have, or very far away from, public health centers or auxiliary public health centers.

In the Health INPRES there is a new program, i.e. assistance program for the improvement of nutrition and health of children and teens.

Primary School children in the least-developed villages and isolated areas outside Java and Bali will be given an extra nourishment, because generally speaking their diet is seriously nutrition-deficient. This extra nourishment will be provided three times a week, by using the local agricultural food products and following the guidance on healthy and nutritious food prepared by the nutritionists.

This extra nourishment has previously been provided in the 1995-1996 fiscal year, as pilot projects in 26 provinces, involving 35,000 school children. The experience of this work became the basis for implementation of this expanded program. Based on this experience, it was discovered that one of the health of Primary School children is the high prevalence of intestinal worm disease. The extra nourishment will have little meaning if this problem is not overcome. For this reason, children who will receive this extra nourishment must also be given anti-worm medication once a year and this will suffice.

This is a very fundamental endeavor. Because, in the long-run, it will produce children who are the seeds of Indonesia's qualified human sources; that is, children with high productivity because they are intelligent, healthy and endowed with stamina. Furthermore, this program will greatly help the rural economy, as it will directly use agricultural products produced by the village.

At the first stage, this program will cover more than 1.7 million school-children involving over 18,000 Primary Schools. Furthermore, it will be gradually intensified by the year, so that in the end most of Primary School children will get this extra nourishment.

Window A: The macroeconomic policy we have been pursuing over the last few years has brought confidence in Indonesia's future economy.

Window B: Indonesia will not wait until the year 2020 to start its free trade. We have started long ago to make preparations.

Window C: Primary School children in the least-developed villages and isolated areas outside Java and Bali will be given an extra nourishment.