Thu, 18 Aug 1994

Success and challenges

President Soeharto's annual State of the Nation Address to mark Independence Day, besides serving as contemplation of our statehood experience over the last year, also gives an accounting of the overall development in the 1993-1994 fiscal year that ended last March. And because that fiscal year marked the end of Indonesia's First Long Term (25 years) Development Stage, this year's address also recounts the development records for that period and charts out the changes the nation will likely face in the Second Long-Term Development Stage, which began last April. The details of the development in all sectors are stipulated in a bulky "President's Report" attached to the speech.

Among the outstanding development records achieved over the past 25 years are the average economic growth of 6.8 percent, the restructuring of the economy away from heavy dependence on the hydrocarbon sector to a broader economic base encompassing a more advanced agricultural sector, which is supported by a structurally stronger and broader manufacturing industry.

The President also cited key indicators, such as health, life expectancy, education -- that show impressive advancements in the overall welfare of the people and testify to the government's determination to implement a balanced development.

But because perceptions are often formed more by rising expectations and aspirations rather than by past achievements in a rapidly growing society like that of Indonesia, and because Indonesia's development is taking place in a rapidly changing world in the midst of the process of economic globalization, the challenges ahead remain formidable.

The first challenge, as the President honestly admitted, is related to poverty and inequality in income distribution and business asset ownership. Despite the remarkable progress, there are still an estimated 26 million Indonesians, or 14 percent of the total population, living below the poverty line. This problem is being coped with by a better targeting program called the Aid Scheme for the Least Developed Villages.

The President also touched upon the need to build a strong and self-reliant base of small-sized and medium-scale businesses in a bid to raise equitable distribution of business and to build a dependable private sector.

That also calls for more meaningful public participation in the development process. Put another way, the development process requires democracy. The President himself acknowledged that many nations had suffered from setbacks because they failed to apply democratic principles in their political and economic life.

As the industrial sector has been and will continue to be the prime mover of development, concerted efforts are needed to strengthen the roots and to broaden the base of the manufacturing industry. That requires broad-based downstream manufacturing operations supported by efficient upstream industries. Such efforts are by no means easy, especially because they should be implemented in a global context in that everything should be designed in terms of international market competition.

Soeharto rightly touched upon another challenge in industrial development -- transferring surplus manpower from the agricultural (meaning rural) sector to the industrial sector. That demands not only adequate vocational training but also changes in the attitude of farm laborers to prepare them to become paid workers in the modern industrial sector. This will be formidable indeed because an estimated 2.5 million job seekers will enter the market every year in the next few years.

The challenges ahead have clearly been identified and the necessary strategy has been set and translated into the Sixth Five Year Development Plan that launched the Second Long-Term Development Stage last April.

The government's main task now is to execute all those programs in a consistent manner without being sidetracked by vested interests either within the bureaucracy, or in the private sector, while improving the total environment for broader public participation in the development process in its broadest terms.