Success and challenges

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.