Why this apathy?

Why this apathy?

Reading local media reports these last few weeks does not give
us any hint as to the importance of the third CGI (Consultative
Group on Indonesia) meeting scheduled to begin in Paris within
two days. For years, around times such as this, we have been used
to being bombarded by news reports, public debates, political
statements, and economic analyses, before, during and after the
meeting. And little wonder. One of the most publicized purposes
of the meeting is supposed to be to decide how far each creditor
member will go in committing itself to supporting the Indonesian
economic development program in the coming year.

This time, the mood appears unusually lukewarm. It is as if
nothing of importance is happening, as if the public is not
concerned, or couldn't care less about what could be going on
behind those closed doors in Paris.

In fact, the meeting will play a very crucial role in the
development of Indonesia's economy. Decisions made in this
meeting will determine the extent of this country's economic
development, because this is the forum which decides how much in
external funds will be made available to finance development.

Considering the relatively low level of domestic savings and
the increasingly heavy burden of servicing current debts, yearly
commitments to the CGI credit line have become vital -- almost to
the extent of its becoming a conditio sine qua non -- to
sustaining Indonesian economic development. For the current
fiscal year, not less than 36.5 percent of the total budget
allotted for economic development is expected to be financed by
the use of external sources -- that is, from CGI sources. This
portion amounts to around US$ 5 billion.

That figure may not seem so very imposing until one realizes
that within the span of the same year Indonesia will have to
raise around US$ 8.4 billion to service its external debt, with
its interest and loan repayments. This means that the expected
new loans will merely decrease the outflow of badly needed funds
from this country -- not provide any fresh inflow. Moreover, one
still has to consider the high probability that this year's debt
service burden will increase in proportion to the exchange rate
fluctuations, especially the appreciation of yen. The World Bank
estimates that almost 50 percent of the US$ 50 billion in medium
and long-term public foreign debts are denominated in yen. An
increase of just one percentage point in the exchange rate of the
yen means an additional US$ 16 million in the debt service burden
for Indonesia.

Even seen from a different angle, this third CGI meeting
should be of high public interest. This fiscal year is the first
year of the second long-term economic development period, which
is projected to promote Indonesia into the group of
industrializing countries. According to government estimates,
around US$ 300 billion will be needed during this sixth five-year
development period -- Repelita VI -- to reach that target. The
government expects to raise only about a quarter of that from
domestic and external sources. The rest must come from the
private sector.

If the government cannot raise the required amount through CGI
sources or other channels, the burden of the private sector will
have to be increased proportionately. Otherwise Indonesia would
not be able to sustain the required average annual economic
growth of more than five percent. The Indonesian economy would
not be able to absorb the 2.5 million people entering the
workforce every year. These potential producers of goods and
services would become liabilities to the country, rather than
assets, both economically and politically.

That reality surely deserves public attention, public interest
and public debate -- which has not seemed to be happening these
last few weeks. It is indeed disheartening if all of this signals
inattention on the part of the public as to what is about to go
on in the coming CGI meeting. Could it be that the local media
and the public are currently preoccupied with other things?