Indonesia's Policy Paper

Indonesia developed its economy as a result of heavy loans from foreign governments. Indonesia is a country with great underlying strengths that can provide a foundation for renewed economic growth. American Secretary of Defense Cohen stated, "Indonesia’s participation in the United Nations’ peace-keeping missions has made it a force for peace in the world. In addition, Indonesia plays a key role in maintaining regional stability. It is a leader in ASEAN and is a fundamental force for peace and prosperity. Over the past 30 years, Indonesia’s economic growth and improvement in living standards has been an inspiration to the rest of the world. I reiterated President Clinton’s commitment to helping Indonesia gain its economic stability. And, the first step must be to work quickly and constructively with the IMF to rebuild confidence in Indonesia’s economic promise and performance."

Indonesia supports the goals of economic and technical cooperation and development in APEC which are: to attain sustainable growth and equitable development in the Asia-Pacific region; to reduce economic disparities among APEC economies; to improve the economic and social well-being of the people; and to deepen the spirit of community in the Asia Pacific. Recent specialist Ministerial Meetings includes Energy (1996 and 1997), Telecommunications (1995 and 1996), Transport (1995 and 1997), Finance (1994, 1995, 1996 and 1997), Human Resources Development (1996), Science and Technology (1996), SMEs (1994, 1995 and 1996) Environment (1994 and 1997) and Sustainable Development (1996). Therefore, the Asia Pacific Economic Cooperation (APEC) Forum has agreed to achieve "free and open trade and investment" in the Asia Pacific region by 2010 for the industrial countries that account for most of its trade, and by 2020 for the rest. It has also launched a wide range of other initiatives to reach its ultimate goal of creating "a community of Asia Pacific economies."

Indonesia has long been a leader of APEC. One of the central ideas developed by APEC Leaders, guided by the chairmanship of Indonesia's President Soeharto, endorsed in the Bogor Declaration of November 1994 the goal of free and open trade in the region - by 2010 for industrialized economies and 2020 for developing economies. Indonesia included its previously announced commitment to bring most tariffs on manufactured products of over 20 per cent down to a maximum of 10 per cent by 2003. Indonesia will reduce its applied tariff from 13 percent in 1996 to 5 percent or 10 percent on nearly all-industrial products by 2003. Indonesia is committed to reducing its MFN tariff on most products to a maximum of 10 percent by 2003.

Indonesia enjoys the tenth highest GDP in the world. It trades heavily with the United States, Europe, Japan, and Singapore. It heavily imports machinery, chemical products, and manufactured goods, which make of 74% of its imports. It exports petroleum, timber, textiles, rubber, and coffee, which make up 70% of its exports.

At the second APEC Economic Leaders meeting, held on 15 November 1994 in Bogor, Indonesia, leaders agreed to the Declaration of Common Resolve, which states, inter alia, that APEC will provide opportunities for developing economies to increase further their economic growth and level of development consistent with sustainable growth, equitable development and economic stability.

Sarwono Kusumaatmadja, State Minister of Environment, noted that APEC's consideration of sustainable cities, sustainability of the marine environment and cleaner production are important contributions to identifying key issues of sustainability. Indonesia’s Intellectual Property Rights Expert Group has done little work in the past. With all the turmoil over East Timor, Indonesia has concentrated on internal problems and not expansion economically. In 1998, a financial turbulence occurred as the GDP decreased 13.7%. This digression resulted in a increase in unemployment, therefore decreasing the expansion of technology and the need for extensive work from the Intellectual Property Rights Expert Group.

Likewise, the Industrial Science and Technology Working Group has done little work for expansion in Indonesia. Turmoil both economically and politically have dominated this standstill in the progression of Indonesia’s technology. Indonesia predicts that its economy should soon pick up and begin expanding, especially since the political problems are decreasing. Though many developments have occurred in regards to the genocide of Indonesians, economist Sri Mulyani Indrawti, secretary of the Wahid-appointed National Economic Council, says many are disappointed with the administration’s corporated reconstructing efforts. Though they may be disappointing, Indonesia continues to strive economically so that its Intellectual Property Rights Expert Group and Industrial Science and Technology may expand economically as the country does politically. The country of Indonesia understands the world’s views on the happenings in East Tumor. We have done everything in our power to bring this tragedy to a quick and bloodless end. We also have a confidence that it is over and we can continue on our path to economic success.

The year 1998 was one of prolonged financial instability and crisis that negatively affected the performance of the Indonesian economy. Production declined significantly as a result of accelerated inflation and high interest rates. The inflation was provoked by imported inflation stemming from accentuated monetary depreciation and domestic supply shortages. In response to this aggravated condition, a broad-based policy package was instituted, with the financial support of the IMF. The policy package included: (i) a tightening of monetary policy, with sharply higher interest rates and strict control over central bank net domestic assets; (ii) an adjusted fiscal framework that took into account the less favorable outlook for growth and allowed for the cost of bank restructuring, as well as expenditures to cushion the impact of the crisis on the poor; (iii) an action program for the restructuring of the banking system; and (iv) a number of additional measures constituting a far-reaching structural reform and adjustment program to improve efficiency.

Over the past six months, the key macroeconomic indicators of the Indonesian economy have shown that the worst of the crisis is over and the road to economic recovery has picked up. These positive achievements were further supported by the peaceful parliamentary elections in June, which in turn prompted the run-up in the stock market as confidence in Indonesia’s economic prospects started to recover. Against these recent developments, the Indonesian economy in 1999 is projected to experience a much lower contraction rate as compared with the unprecedented negative growth of 13.7% last year.

Bank Indonesia, with support from the IMF, set quantitative targets for base money and its components, namely net international reserves (NIR) and net domestic assets (NDA), which have served as operational guidelines. With a view to strengthening the credibility of the policy among market players, the targets and performance have been made transparent through periodic announcements.

We have shown significant steps towards a greater good. With our dedication to APEC and the worldwide economy we are doing everything we cannot only benefit our country but the world as a whole. We have many plans such as lowing tariffs, increasing imports, tightening of our monetary policy, and reconstruction of our banking system. To aid us in this period of stabilization our country is involved in.