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New Member Spotlight
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Ten-Point Economic Recovery Program- by Coordinating Ministry of Economic
Affairs (September 2000)
1. Create stability in the financial sector
 | Strengthen the financial sector as part of a drive to improve economic fundamentals |
| Increase coordination and synchronization of fiscal and monetary policy between the Economic Team and Bank Indonesia |
| Use improved macroeconomic stability to promote renewed investor confidence |
2. Increase revenue levels from non-oil exports
| Harness excess manufacturing capacity to expand export oriented manufacturing |
| Expand private sector access to export-oriented credit |
| Ensure that exporters integrate the competitive Rupiah value into their marketing strategies |
3. Increase agricultural productivity and the welfare of farmers
| Promote agricultural mechanization, particularly off-Java, to increase productivity |
| Focus on developing competitiveness of 20 leading commodities for domestic and export markets |
| Promote processing industry expansion to increase quality and added-value of agricultural products |
| Promote the development and use of technology to increase agricultural productivity and increase farmer incomes |
4. Accelerate banking and private sector restructuring
| Focus on internal restructuring of the management and the business of re-capitalized banks in order to ensure that they are healthier, more prudent, competitive and profitable |
| Promote establishment of a consolidated national banking structure with a de-emphasis on concentrations based on banking mergers and acquisitions |
| Improve the loan portfolios of the banking sector through expanded credit allocations for small- and medium-scale businesses |
| Ensure a profitable exit strategy for the government in the sale of banking sector assets |
5. Place priority on equity-based rather than loan-based recovery
| In addition to creating a more positive overall investment environment, promote investment in infrastructure projects that create employment opportunities and encourage regional and local economic development |
| Ensure that the cost benefits of infrastructure projects are maximized through a mix of domestic and foreign private sector investment and multilateral loans or government-to- government support |
6.Carry out a value-creation approach to privatization of state-owned assets
| Increase the value of state-owned assets through financial restructuring prior to sale |
| Increase the pace of privatization in sectors such as telecommunications, transportation, estate crops, hotels and tourism, infrastructure, and oil and gas, that can attract foreign invest |
| Promote foreign participation as majority shareholders in secondary operations through open, fair, and transparent tender processes |
| Maintain the government's long-term share buy-back option as required |
| Use the capital market or unit trusts to promote public ownership in privatized state-owned enterprises |
7. Meet economic decentralization targets through an orderly and phased transition
| Maintain macro and fiscal balance between the central and local governments through implementation of a process of phased decentralization |
| Promote the implementation of local-level economic decentralization in areas of basic infrastructure
development and operation |
| Enhance regional economic development through trade and investment cooperation between areas and regions |
8. Optimize utilization of natural resources
| Promote the best use of the country's abundant maritime resources through the application of sustainability and environmental safeguards |
| Carry out maritime sector reform in an effort to promote domestic and foreign private sector investment |
| Support the adoption of modem fishing equipment by traditional fishermen to maximize industry productivity | | Conduct gradual liberalization in the oil sector, particularly downstream, to promote efficiency in processing,
Distribution, and marketing |
| Promote foreign participation as majority shareholders in secondary operations through open, fair, and transparent tender processes |
| Maintain the government long-term share buy-back option as required |
| Use the capital market or unit trusts to promote public ownership in privatized state-owned enterprises |
9. Expand the development of micro-, small-, and medium-scale enterprises
| Improve access to credit for micro-, small-, and medium scale enterprises through links to financial institutions experienced in managing credits to these businesses |
| Provide the technical support to micro-, small-, and medium-scale enterprises required to encourage financial institutions to supply credit |
| Provide support to promote the establishment of a competitive business environment that will increase the productivity of small- and medium-scale enterprises |
10. Increase employment generation, particularly in rural areas
| Increase levels of real rural wages by improving terms of trade for agricultural commodities |
| Accelerate development of rural infrastructure projects to increase real rural wages while also promoting economic development |
Recent Developments in the Indonesian Economy
While the results are not yet evident throughout the country, the
Indonesian economy has begun to move forward:
| During the second quarter, real GDP was up 4.13% from the same quarter in 1999 | | Non-oil exports were up 27% for the first seven months of this year compared to 1999 | | Nominal non-oil exports were a record in July, the third such record in four months | | Indonesia's trade surplus in July rose to US$2.86 billion, exceeding projections and contributing to a total surplus of US$14 billion so far this year | | Industrial electricity usage, a good indicator of production, was up 1% for the first seven months of this year compared to the same period in 1999 |
| Automobile sales rose by almost 400% in the first seven months of 2000 and are now back to early 1996 levels |
| Motorcycle sales grew 85% over the same period in 1999 |
| Sales at large retail establishments were up 1% for the first six months of 2000 compared with the same period in 1999 |
| Oil and gas exports were up by nearly 65% and the oil and gas trade surplus reached US$4.5 billion for the first seven months of the year over the same period in 1999 |
| Foreign investment approvals totaled US$3.76 billion in July bringing the January-July 2000 total to US$6.09 billion compared with a total for all of 1999 of US$10.9 billion |
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