We will continue to implement reforms: Soeharto

Following is an excerpt of the accountability address presented by President Soeharto at the opening of the General Session of the People's Consultative Assembly (MPR) yesterday in his capacity as Mandatory of the nation's highest institution.

JAKARTA: As a result of past achievements, our people have numerous new hopes. New opportunities are awaiting us. New challenges are before us.

These new hopes are higher than the previous ones. These new opportunities are wider than the previous ones. These new challenges are more difficult and complicated than the previous ones.

We live in an era where mankind is preparing to enter the new century. For the last five years, I often serve a reminder that we live in the midst of great changes, where sometimes we do not yet know exactly its essence, its character and its scope. In fact, we have never imagined them before.

Well aware of such a heavy task, I pay serious attention to the important message contained in the last sentences of the 1993 Guidelines of State Policy. We are all reminded by them that the success of our nation's development mainly depends on the participation of all forces of the nation. This is the reason that in leading the government, I have continued the deregulation and debureaucratisation policies which were adopted earlier. The purpose is to awaken the public initiative and creativity with a view to building themselves to become strongly self-reliant.

We have materialized our firm determination to continue the enhancement of a democratic and constitutional life through last year's general election. The political climate was quite high in the run-up to the last general election. Part of it was caused by the fact that some of us were not yet mature enough to put democracy into practice and misused freedom and openness.

There were also those who wanted to impose their will through means which actually destroyed the image of democracy and was, in fact, unlawful. We were concerned and saddened by the victims who lost their lives. By acknowledging the shortcomings that we have to address in the future, we were encouraged that nine out of 10 of those eligible voters have exercised their voting right. This shows the high degree of political awareness of our people. The use of our people's voting rights was far higher than in other countries which have enjoyed hundreds of years of political tradition.

The appropriate implementation of the dual-function of the Indonesian Armed Forces (ABRI), which is adjusted to the changes of time, has given a meaningful contribution to a dynamic national stability, fresh democratic life, mature political life and well secured safety of the nation and integrity of the national territory.

Taking into account the sheer size of the country's area, our homeland which consists of tens of thousands of big and small islands and the enormous size of its population, then the number of personnel and budget allotted to the Armed Forces are very small. This clearly demonstrates the tradition of the Armed Forces as fighting soldiers, who give priority to the promotion of the people's well-being than their own development.

Apart from national stability, a development requires a conducive regional and global climate. The basic essence of our independent and active foreign policy is, on the one hand, to sustain any developments that support the development of nations and, on the other hand, to prevent the expansion of events that hamper development. This is the reason why we continue to consolidate ASEAN. We take an active part in the Non-Aligned Movement, in the Group of 15, in the D-8, in APEC, in the UN and in other international organizations.

Until the middle of last year, the general atmosphere at home and in the region, as well as in the international arena, was conducive to the smooth implementation and continuation of our development.

But apparently, 1997 was a year of great concern for us.

Last year, we have suffered from one accident after another on land, at sea and in the air. Our economic lifeline begun to be compromised.

We were also subjected to a long drought. Extremely vast areas of our bushes and forests caught fire. This resulted in the decline of productivity of crops, particularly foodstuffs and plantation. In 1997, the production of rice, maize, soybeans, cassava, sweet potato, peanuts and mung bean was predicted to decline by around 1.3 to 5.6 percent. This natural disaster disrupted transportation and the availability of foodstuffs in a number of regions.

But, we had to go through a much harder trial.

Since the middle of last year, the monetary turmoil has hit us so unexpectedly.

This region was engulfed in a financial crisis. Then it became eventually more serious, more wide-spread and more lasting than anybody could have imagined. And yet our economic fundamentals were quite strong at that time. As a matter of fact, many experts believe that the depreciation of our rupiah is absolutely unreasonable.

The crisis subsequently spread to the East Asian region. A number of countries outside Asia started to feel its indirect impact.

The international community realizes that unless it is resolved properly, it might eventually become a global-scale crisis.

Steps were taken on the regional and international levels. But, in the end, the solution depends on the respective countries.

Our determination is firm to overcome the problems we are now facing. We shall fight all-out to extricate ourselves from the crisis.

We are grateful and highly appreciative for the assistance provided by the international institutions and friendly countries. All of this has clearly been helpful to our own endeavors.

However, the burden of responsibility rests precisely on our own shoulders. It is precisely our own action that determines whether we succeed or fail in overcoming the present crisis.

We are aware that these are definitely difficult steps. They may possibly be very difficult and painful.

We must be convinced of our own ability. We must exert all our potentials to solve the problem we are facing at present. We must sincerely share the burdens amongst ourselves as fairly as possible.

In order to resolve this monetary crisis, I have sent a letter to the Managing Director of the International Monetary Fund (IMF) on Jan. 15, 1998, accompanied with an economic and financial reforms and restructuring program. This program has the support of the IMF. Financial assistance is also coming from the World Bank, the Asia Development Bank and a number of other countries.

The main objective of our economic and financial reforms and restructuring program is to restore confidence in our currency, in our financial institutions and in the future of our economy.

It is extremely important to restore confidence.

It is precisely the loss of confidence that becomes the primary cause of the numerous difficult problems we are confronting today. The serious implementation of this program will hopefully restore the confidence of economic players at home and abroad.

In order to ensure the best possible implementation of the program, I have established the Council for the Consolidation of Economic and Financial Resilience, which I chair myself.

In accordance with the set schedule, we have carried out parts of the programs while the other parts will follow later.

We are firmly committed to implement this program in its entirety.

The immediate measure we have adopted was the revision of the 1998-1999 draft state budget, which has now been approved by the House of Representatives. The next step will be the rehabilitation of the banking sector with a view to rebuilding a sound banking system. This program covers two essential elements. First, a full guarantee provided by the government to all depositors and creditors of national public banks. Second, the establishment of a National Banking Restructuring Agency, which is responsible for the rehabilitation of the existing ailing banks and whose recovery prospect is dim.

A few days ago, I have approved the merger of four state-owned banks, namely: Bank Dagang Negara, Bank Bumi Daya, Bank Pembangunan Indonesia and Bank Expor Impor Indonesia. The new name for these merged banks is Bank Catur. To restore the health and enhance the competitiveness of the private banks, the government has set the minimum capital requirement and encouraged them to merge.

The other important measures were to ensure unhindered foreign and domestic trade, to facilitate investment, to remove monopolies and abolish special privileges granted to the national automobile project and the Nusantara Aircraft Industry.

Despite the fact that we already have, and started to carry out, clear and fundamental reforms and restructuring program, there are no signs yet that the situation has improved. On the contrary, the people's life is becoming more difficult.

As a whole, the exchange rate of our rupiah continues to be weak. It strengthens a while and then weakens again. During these last few days, the exchange rate of US$1 hovers around Rp 9,000 to Rp 10,000. As a consequence, corporations face serious difficulty and reduce their activities. The danger of unemployment starts to emerge. The price of imported goods, or locally-produced goods with high-import content, has become very expensive, including that of medicine. The price of daily necessities has also been pushed higher.

I share the sadness of housewives and low-income families in dealing with the skyrocketing prices. The public becomes restless. Even the slightest misunderstanding has sparked a greater unrest. The situation becomes even worse when there are individuals who fish in the muddy water.

Our economic condition becomes worse, because our L/Cs are not accepted by banks abroad.

Our economic plight attracted the attention of a number of heads of government of other countries. They came to see me. Others called me on the phone. They expressed their views on what they consider as a good solution to resolve our problem. They have also extended their helping hands. We are highly appreciative for all this.

I shall not hesitate to do whatever possible to overcome the situation in order to alleviate the increasingly heavy burden of the people's life.

I have started, and will continue, to implement the economic and financial reforms and restructuring programs which have the support of IMF.

However, there are no signs of improvement yet.

The key to the problem is the stabilization of the exchange rate of our rupiah at a reasonable level. Unless this is achieved, I do not see any possible improvement within the short period of time.

This is the reason why I have asked the IMF and other heads of government to assist us find a more appropriate alternative.

I refer to the more appropriate concept as an IMF-Plus.

I myself am carefully and cautiously contemplating the possible adoption of the Currency Board System.

Whatever measure we shall take, we need the support of the IMF as the authoritative and highly reputed international financial institution.

Undoubtedly, in the end, our fate rests in our own hands.

The efforts to find the best possible solution have become the topic of discussion by the general public. With good intention, I value positively these discussions. This is a dynamic part of our democratic process. It reflects a sense of belonging, a sense of sharing the common future. I have been following all the views expressed with great interest. I appeal to all of us for not exaggerating the differences of opinion, especially those that confuse further the common people. Differences of opinion should not become the seeds of dissension among us. Even more so, when we now need the strongest possible unity among ourselves to weather safely together from the current storm.

In order to overcome the situation, we have taken various economic restoration measures. Some of them are short-term and others are of a longer term.

The short-term measure covers the adequate provision of food and medicine, as well as employment opportunities for those who have lost their jobs. For the longer term, we are formulating economic and financial reforms and restructuring programs, as I have mentioned above.

To meet the food demand, we reduce the post-harvest waste, improve the intensification quality, expand crops area through the use of idle farmland, enhance the use of irrigated and ebb- tide lands, and also utilize industrial forest area for cash- crops.

The effort to raise production covers 2.3 million hectares of paddy field, 540,000 hectares of maize, 527,000 hectares of soybeans and 14,000 hectares of cassava. We shall continue this effort and expand it with a view to consolidating food security. While waiting for this effort to produce result, we import essential foodstuffs to meet demand and maintain price stability.

Another extremely important demand of the people is medicine. Although we have been producing various kinds of medicine, most of the raw materials are still imported. The exchange rate fluctuation causes shortages of medicine supply and the price continues to rise. This situation may lower the public health standard. To meet the demand for medicine, its importation is being accelerated and its production resumed.

To facilitate its distribution, to provide certainty and to maintain a stable and reasonable price, the government provides subsidies to imported food and medicine. These subsidies are covered by the state budget.

We are overcoming the problem of unemployment through the labor-intensive project. This project creates productive employment opportunities to seasonal and unskilled laborers, both in the rural and urban areas. It covers the rehabilitation or construction of rural and village roads, irrigation networks, provision of clean water, regreening and reforestation, as well as other productive undertakings, according to the situation and need of the local community.

Employment opportunities are further prioritized for the development of food production and agro industry. The economic activities in this agricultural sector practically are not affected by the currency exchange rate fluctuation, because they rely on our abundant resources.

Furthermore, the nature of these activities is labor- intensive. We are also developing a program to absorb skilled workers, especially in the urban area. The emphasis will be on entrepreneurship, because companies may not be able to expand employment opportunities immediately. In fact, these companies may probably be unable to quickly reemploy the same number of workers who have been laid off.

We continue to follow, study, improve and reinforce these various activities, so that the result will quickly be enjoyed.

We must restore our economic and monetary condition. We must reawaken our economic resilience. This is an awfully difficult task.

However, we are not discouraged. We have the power, experience and determination. To date, we have built the infrastructure and human resources, as our assets to stand upright again and continue with development.

Only one year is left to complete Repelita VI. But we have exceeded many of the final targets for Repelita VI. Certainly, there are still some which have not yet been reached.

During the last years of Repelita V and the first year of Repelita VI, our economic growth was so high that it was necessary to revise the target of economic growth to an average of 7.1 percent per year. The estimated total investment and its financial resources also had to be adjusted.

The implementation of development in Repelita VI continues to be based on the Trilogy of Development. This means that we have to correctly combine stability, growth and equitable distribution.

Efforts to create an economic stability are made through, among other things, the control of the inflation and current account deficit.

The inflation rate is expected to improve from 8.6 percent to go down to 5 percent by the end of Repelita VI. Whereas the current account deficit will be 1.9 percent by the end of Repelita VI, compared to 1.8 percent at the end of Repelita V. Meanwhile, one of the important targets of equitable distribution is reducing the number of the poor to around 6 percent of the total population.

Until the third year of Repelita VI, our national economy has shown a steady growth as expected. the economic growth rates during the 1993-1996 period were 7.3 percent, 7.5 percent, 8.2 percent and 8 percent respectively.

However, during the second half of 1997, the monetary turmoil struck unexpectedly.

Our economic growth then slowed down. The provisional figure of the economic growth in 1997 was just 4.7 percent. Whereas, in fact, during the four years of Repelita VI, it reached an average of 7.1 percent annually, which means that it was the same as the revised annual target for Repelita VI.

Such an economic growth was sustained by the increase of direct investment as the essential motor of economic development. Taking into account to the whole value of the approved investments during Repelita V, the approved domestic investment rose one and a half time and foreign investment rose three times during the four years of Repelita VI.

The population growth rate continued to be lowered, so as to reach 1.54 percent in 1997. This figure is close to the final target for Repelita VI, which stands at 1.51 percent.

With such economic and population growth rates, Indonesia's per-capita income has risen. In rupiah denomination, the value rose from Rp 2.7 million in 1996 to Rp 3.1 million in 1997. thus, the real per-capita income in rupiah denomination in 1997 has surpassed the target set for the fourth year of Repelita VI, which stood at Rp 3 million per-capita.

In U.S. dollar denomination, the per capita income in 1993 was $842, and it rose to $1,155 in 1996, which means it exceeded the target of $1,118. However, because of the depreciation of the rupiah, the per-capita income in 1997 dropped further to $1,089.

The adequately high economic growth until the third year of Repelita VI was also followed by a controlled internal stability. During that period, the inflation rates were 8.6 percent, 8.9 percent and 5.2 percent respectively, which was close to the final target Repelita VI of 5 percent.

As I mentioned earlier, since the middle of 1997, the prices of essential commodities have risen. This trend started in September last year, with an inflation rate of 1.3 percent. It remained high until January 1998 that reached 6.9 percent. The inflation rate for the entire 1997 became 11.1 percent, and during the first 10 months of the 1997-1998 fiscal year, it reached 16 percent. This price increase was also spurred by the long drought, that led to the decline of agricultural production and price increases of food stuffs.

As far as the external stability is concerned, the export growth since 1993-1994 was generally slower than import. The export rate which was not too high was due to the fiercer competition, especially an increasingly great number of products of labor intensive industries were started to be produced by new exporting countries; and also due to the increased demand at home. On the other hand, continued intense economic activities -- including investment-- have boosted the import growth rate.

This trend led to the continued increase of the current account deficit, from $2.9 billion in 1993-1994 or 2.1 percent of the GNP, to $8.1 billion in 1996-1997 or 3.5 percent of the GNP. However, the significant rupiah depreciation in the middle of 1997-1998, has weakened import. At the same time, export has risen, especially of products which have little import- components. As a result, the current account deficit has improved, almost half of the previous year's figure, that is $4.3 billion or 2.2 percent of the GNP. This figure comes even closer to the target set for the final year of Repelita VI, namely 1.9 percent of the GNP.

Meanwhile, the entire Indonesia's debt stock which amounted to $83.3 billion by the end of March 1994, has risen to $101.3 billion by the end of March 1995, and then it went up again to the tune of $136.1 billion by the end of December 1997.

The public debt has declined from $55 billion by the end of March 1994 to $54.1 billion by the end of December 1997, or a drop form 66.1 percent to 39.8 percent of the total debt.

On the contrary, the private debt has gone up from $28.3 billion to $82 billion, or an increase from 33.9 percent to 60.2 percent of the total debt.

Furthermore, the Debt Service Ratio (DSR) of the private sector rose from 12.8 percent in 1993-1994 to 27.4 percent in 1997-1998. Conversely, the public sectors DSR dropped from 19.1 percent in 1993-1994 to 11.8 percent in 1997-1998. As a whole, the public and private DSR have risen from 31.9 percent in 1993- 1994 to 39.2 percent in 1997-1998.

With the increased private debt servicing during the final years of Repelita VI, it would be difficult to reach the target of the overall DSR of 24 percent by the end of Repelita VI.

Our external debt servicing burden is really heavy. But the government has enough funds and foreign exchange to honor its obligations.

Indeed, we are now facing a very serious economic hardship. But we are confident that by working hard and implementing the programs we have formulated, we will definitely be able to overcome these difficulties.

I must reaffirm that the Indonesian government is committed to honor all its external debt obligations on time.

The macroeconomic indicator I just mentioned is indeed important to determine whether we have made progress or suffered a setback in the implementation of development.

However, no less important is whether the level of prosperity of our people is improving or, on the contrary, deteriorating.

One of the essential indicators of the people's prosperity is the number of poor people. The condition of our society today is as follows. In 1970, there were 70 million poor people among us or around 60 percent of the whole population were poor. The number of poor people has declined to 27.2 million or 15.1 percent in 1990. Then, it went down further to 25.9 million or 13.7 percent in 1993.

Since the start of Repelita VI, additional efforts were made especially for the poor segment of the population. The primary poverty alleviation program is the Inpres for the least developed villages. The result has been quite encouraging. In 1996, the number of poor people has declined to 22.5 million or around 11.3 percent. This means that in three years, there was a drop in the number of poor people by 3.4 million people, or a decline of 2.3 percent.

The poverty alleviation program is a part of the national campaign to help the weak, which is motivated by the spirit of togetherness, tolerance and solidarity. In this connection, this program is expanded with the Takesra/Kukesra programs, to mobilize funds from the better-off members of society.

Only in one and a half year, almost all 10.7 million Pre- Prosperous and Prosperous-I families were successfully encouraged to save. In the meantime, 10.5 million families have already obtained business credits (Kukesra). The joint business group (Kube) which was established through the Social Welfare Program has also expanded its business, increased its income and heightened its social solidarity.

Business promotion for the poor people in the least-developed villages is encouraged further by the opening of local markets through the Supplementary Food for School Children Program (PMT- AS) that absorbs the products of the rural community. The isolated least-developed villages have also started to establish relations with the wider public by the development of infrastructure in the least-developed villages. This development simultaneously creates new jobs and technological transfer for the least developed community members.

Closely related to the welfare improvement efforts and poverty alleviation is the creation of employment opportunities. In line with the adequately high economic growth during the 1993-1996 period, the increased number of work force was accompanied by expanded employment opportunities. The work force has increased from 81 million people in 1993 to 88.2 million people in 1996, or an increase of 7.2 million people.

At the same time, the number of workers rose from 77 million people to 83.9 million, or an increase of 6.9 million people. The most encouraging is the enhancement of our manpower and this also has an impact on higher productivity.

Meanwhile, the well-being of workers is improved by the setting of regional minimum wages. In 1997, the minimum wages had reached 95.3 percent of the minimum physical need. The improvement of the workers' well-being is also carried out through the adoption of the social security system for workers.

Another yardstick of the improvement of the people's well- being is the availability of energy and protein, which in 1996 was 3,208 kilo-calories and 73.1 grams protein. This means that we have surpassed the suggested level of sufficiency set in Repelita VI, that is 2,500 kilo-calories and 55 grams protein per-capita/day. Also the energy consumption today is nearing the figure suggested in Repelita VI, whereas protein consumption has exceeded it. The nutrition condition of the public has also improved.

The improved public health is also evidenced by the following facts. The infant mortality rate had declined from 58 in the 1993 to 52 per 1,000 births in 1997. This figure is close to the final target for Repelita VI, that is 50 per 1,000 births.

Furthermore, the maternal mortality rate dropped from 452 in 1993 to 390 per 100,000 births in 1994. The gross mortality rate had gone down from 7.9 in 1993 to 7.5 per 1,000 inhabitants in 1997, which means that it reached the final target for Repelita VI. At the same time, the life expectancy had also improved from 62.7 years in 1993 to 64.2 years in 1997, as it comes close to the ultimate target for Repelita VI, that is 64.6 years.

To continue the improvement of the public health standard, an information campaign on nutrition for the rural community all over the integrated services posts (Posyandu) was conducted, covering around 257,000 integrated posts.

With a view to improving wider and equitably distributed health services to the public, public health center and hospital networks were established since the First 25-Year Long-Term Development program. In 1997-1998 we have 7,106 public health centers and 1,890 hospitals spread evenly all over the country. The improvement of health services is sustained by an increasingly great number of medical personnel and they are more evenly dispersed, consisting of tens of thousands of doctors, 62,000 traditional midwives and other para-medics.

The development of health and family welfare is closely linked to family planning services. Until 1997-1998, the total number of active family planning participants has reached around 26.8 million child-bearing couples. This number surpassed the target for Repelita VI, that is 26.2 million couples. This is the reason why we succeeded in controlling the population growth.

The improvement of the people's well-being must clearly be accompanied by the provision of houses. The number of simple and very simple houses that were constructed has reached more than 550,000, this means that it passed the target for Repelita VI of 500,000 houses.

In addition, development is being continued for a greater number of drainages, waste disposal, waste water treatment and clean water facilities that cover hundreds of cities. Also a greater number of villages is supplied with clean water. These efforts mean the improvement of the extremely important environment.

Another major achievement is in the field of education. Entering the Second 25-Year Long-Term Development program, the Six-Year Elementary Compulsory Education was extended to a Nine- Year Elementary Compulsory Education. This is a very important step for laying a solid foundation of qualified human resources development for the subsequent stages of development.

In Repelita VI, the opportunity to obtain education has been expanded. The quality of education has improved in all disciplines, types and levels. The link between education and the business world and the need for employment is becoming more evident.

In brief, the people's well-being as a whole is improving. This was made possible because we have made significant progress in the development of other economic areas.

The industrial development has consolidated the national economic structure. The linkages with other sectors become closer and it has expanded employment and business opportunities. The growth of the industrial sector has stimulated activities in other development sectors.

In Repelita VI, various industries have developed, such as industries that produce goods to meet domestic demands and people's life, export-oriented industries, industries that use national resources, industries that have strategic values and affect on the development of other industries and industries that promote economic activities in areas outside Java.

Based on constant prices of 1993, during the four years implementation of Repelita VI the processing industries have grown with an average rate of around 10.3 percent annually, whereas the non-oil/gas processing industries grew by about 11.4 percent per year. This growth rate surpassed the target of the annual average growth set for Repelita VI, that is 10.2 percent for processing industries and 11.3 percent for non-oil/gas processing industries.

The industrialization process has changed the national economic structure: from a greater emphasis on agriculture to industry. In 1993, the share of industrial sector in the Gross National Product (GNP) was 22.5 percent. In 1996, its share rose to 25.5 percent. This figure is close to the goal set for Repelita VI, that is 25.9 percent.

Until 1996, the industrial sector had absorbed 2.3 million manpower. The small industry absorbs the most manpower. Our industries produced a greater quantity of goods, which are more diversified and of increasingly high quality.

The export of goods from non-oil/gas processing industries tend to increase. In 1993, its export value reached $23.3 billion. In 1997, it was predicted that it would reach over $34 billion. In 1997. the share of export of non-oil/gas processing industries in the overall national export has reached around 65 percent.

The growth of export of industrial goods was mainly due to the relatively substantial increase of primary commodities, such as textile, processed timber, leather wear and shoes and footwear, steel, machinery and automotive, electronics, processed rubber products, basic chemical products, gold, silver and other precious metals.

The small industry plays an increasingly important role in the expansion of business and working opportunities, in rural economic development, in poverty alleviation and even in export. During the 1993-1996 period, the export of small industry has risen to an average of around 4.4 percent. In 1996, its export value reached $2.5 billion.

Although the role of the industrial sector assumes greater importance, this does not mean that the agricultural sector is unimportant. On the contrary, the national development will continue to rely on agriculture. What is needed is to raise its productivity and added-value.

The agricultural production had increased and the added-value of agricultural commodities had also risen. Between 1993-1996, the GNP of the agricultural sector grew by an average of 2.9 percent annually.

This is still lower that the target set for Repelita VI of 3.3 percent. However, during these years the growth of fishery reached 5.1 percent, plantation 4.7 percent, stock-raising 4 percent and food crops reached 1.6 percent. The growth of the fishery sector came close to the target for Repelita VI, i.e. 5.2 percent, The growth of plantation has surpassed the target for Repelita VI of 4.2 percent. The growth of food crops was lower than the target set for Repelita VI of 2.5 percent, due to the prolonged drought in 1994 and again in 1997. These developments show that fishery and plantation became the new sources of growth of the agricultural sector.

During Repelita VI, the number of manpower absorbed in the agricultural sector tended to decline. In 1993, the agricultural sector absorbed around 40.1 million people or 50.6 percent of the number of manpower. In 1996, the number dropped to 37.7 million people or 44 percent of the total manpower.

However, at the same time the productivity of manpower in the agricultural sector had risen from Rp 1.5 million per person in 1993 to Rp 1.7 million per person in 1996 or an average increase of 4.9 percent annually. The higher productivity of manpower in agriculture has exceeded the target for Repelita VI of 2.4 percent.

The decline in the number of manpower in the agricultural sector and the higher productivity of manpower in the agricultural sector, which were accompanied by the increase in the absorption of manpower in the industrial and service sectors, showed the changing process of the national economic structure. The change of the structure is good and it has the right direction.

The growth of the agricultural sector cannot be separated from the development of irrigation infrastructure. The irrigation development had expanded the irrigated paddy field area from 5.5 million hectares at the end of Repelita V to 5.9 million hectares in the fourth year of Repelita VI. The final target for Repelita VI is 6.3 million hectares.

In order to maintain food self-sufficiency, new irrigation network was built and paddy fields created, totaling 161,000 hectares and they are located outside Java. To overcome the impact of the drought and, simultaneously, sustain the higher income of the rural population, the irrigation network in the rural area was rehabilitated, covering 1.4 million hectares during Repelita VI. Furthermore, the swampy area network was expanded, as well as the development of the peat area as a new production field in Central Kalimantan.

The progress in the development of water works and irrigation is closely linked to activities in the forestry sector, especially in the provision of sustainable water resources and the control of erosion and sedimentation. Until the fourth year of Repelita VI, a total of 2.6 million hectares of destroyed forests and critical forest areas were rehabilitated.

The development of industrial forests covers an area of 1.2 million hectares or around 94 percent of the final target set for Repelita VI. The development of small-holder forests covers an area of 474.400 hectares, well over the final target for Repelita VI of 250,000 hectares.

The development of land transportation is expected to reach the target for Repelita VI. Most of the development of land transportation is a road infrastructure development program.

The river and lake transportation, as well as crossings, is improving by the increased number of berths and ferry-boats. The river and lake transportation is very important as a transportation means in the hinterland and isolated areas.

Significant progress was also achieved in the development of sea and air transportation.

Meanwhile, the mining sector grew by an average of 6 percent every year during the four years of Repelita VI. This growth is higher than the target set for Repelita VI, namely an average of 4 percent annually. A striking increase of the coal production was recorded, both to meet domestic and export demands.

The production rose from 28.6 million tons at the end of Repelita V to 54 million tons in 1997-'98. This increase has raised Indonesia's position as the third largest coal-producer in the Asia-Pacific region and the third largest exporter in the world. The coal export during the fourth year of Repelita VI, which stood at 39.3 million tons, has passed the final target for Repelita VI of 39.1 million tons.

The production and export of other minerals generally were on the rise, although the price in the international market has not always been favorable.

The oil and gas production was maintained, in line with the target for Repelita VI. Apart from the discovery of new oil fields, it was also attributed to the use of advanced technology such as enhanced oil recovery.

In Repelita VI, we tried to reduce the share of oil in the provision of energy and to increase the non-oil share. The target of the share of oil for primary energy provision in 1997-'98 was 53.2 percent. This target has already been reached because in that year the share of oil dropped to 53.1 percent.

The development of power generation is expected to meet the need for an economic growth. The need for electricity in the rural area is supported by the use of micro-hydro and solar energy.

One of the main sectors of the national economy is tourism. The growth of tourism was evidenced by the increased foreign exchange earnings and the number of foreign tourists. Furthermore, during the last four years, tourism activities have opened almost 700,000 new jobs.

Rapid progress was also made in post and telecommunications, which made a significant contribution to the progress of development in other sectors.

The intensified development in all sectors requires the mastery and application of science and technology, especially in the run-up to the globalization era and the increasingly fierce competition. The development of science and technology needs an enormous investment. Therefore, we are doing it in accordance with the funding resources.

The mastery of science and technology has made a very substantial progress, as demonstrated by the ability of Indonesia's men and women to design and produce on their own a sophisticated aircraft in its class, namely CN-250.

We must carry out equitable distribution as an important aspect of our development.

Therefore, development policy and impetus must take seriously into account the regional economic growth. During the first three years of Repelita VI, the average rural development performance for all provinces has reached the target for Repelita VI. The provinces in the eastern part of Indonesia have apparently grown faster than those in the west. Furthermore, the decline in the number of the poor was also more meaningful compared to the western part.

In the meantime, the transmigration program in Repelita VI made an important contribution to the distribution of population, poverty alleviation, equitable to the distribution of intra- regional development and community integration.

To create equitable distribution, especially to carry out the mandate of Article 33 of the 1945 Constitution, the role of cooperatives becomes increasingly important as the people's business and economic forum.

Its business scope expands to various production sectors and services, particularly in the savings and loan business. In the rural areas, cooperatives have grown into the community's main economic institution.

Until the fourth year of Repelita VI, more than 52,000 cooperatives were established, with a total business value amounting to Rp 13.6 trillion and with a membership of over 28 million people. Among others, more than 12,000 cooperatives of have developed into self-supporting cooperatives. Around 4,700 cooperatives --including a number of savings and loan cooperatives -- have become medium and big business enterprise, with a business value exceeding Rp 1 billion annually.

It is impossible that development does not bring about progress, unless it is sustained by an adequate state apparatus. With all its shortcomings, our state apparatus has certainly made improvement in planning, operation and supervision of general government duties as well as development tasks.

Thus, the overall implementation of the Presidential duties during the past five years, which were entrusted in me by the Assembly. It includes the implementation of development as mandated by the 1993 Guidelines of State Policy. The complete and detailed accountability report on the implementation of development is included in the big book, as an annex to this accountability report.

Until the middle of last year, everything has proceeded normally. Our development went on unhindered. A number of targets for Repelita VI were attained. In fact, we have even surpassed some of them.

Since the second half of last year, the monetary turmoil struck. It seems that everything what we have built with great difficulty, sometimes, with pain and sacrifices, was all of a sudden undermined. Not that we did not know it would have in fact happened.

In the past, I have repeatedly said that whether we want it or not, whether we like it or not, whether we are ready or not, we would definitely feel the impact of the unifying world economy. This impact has come sooner than we had anticipated. The adverse impact is much more serious than what we had imagined.

Apparently our economic resilience was not strong enough to withstand such external blow. Moreover, apart from external influences, some of the hardship we are suffering today is also due to our internal weakness.

We do not have to look for a scapegoat. It is also useless to look for a scapegoat.

It is far more useful for us to conduct introspection. We may find a blessing in disguise from this hardship.

With a full awareness, we must have the courage to acknowledge our own weaknesses and shortcomings. We look for strength from this weakness.