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The Indonesian economy appears to have recovered from the recession of 1982. Preliminary estimates put the growth rate for 1983 in the range of 3 to 5 percent. It is likely that the actual figure is closer to the upper estimate. As a result of the economic resurgence, there is now considerable optimism that the 5 percent growth target of Repelita IV, which commenced on April 1, will be attained or even surprassed.
The balance of payments situation is unexpectedly comfortable. International reserves have grown strongly since the middle of 1983, initially because of the return of much of the speculative capital which left the country before the April devaluation. More recently, exports of several non-oil commodities have risen, owing to buoyant world prices. International banks signalled their confidence in the country`s balance the payments and credit worthiness earlier in the year by over-subscribing to a syndicated loan, the value of which was subsequently raised from $500 million to $750 million. There has been a spurt of inflationary pressure in the first four months of 1984, much of it induced by government administered price increases. However, it is expected that, as in 1983, price increases in the second half of the year will be quite modest.
As always, developments in the rice and oil sectors have a strong bearing on economic performance. Their good production record in 1983 accounts for much of the better-than-expected growth rate. The performance of the manufacturing sector reamins patchy. Production has picked up from the low levels of late 1982 and early 1983, and several large resource-based projects, either recently or soon to be inaugurated, will provide a further stimulus. There are also some encouraging signs of sustained growth in labour intensive manufactured exports. But manufacturing is not yet the leading sector it is projected to be in Repelita IV. The debate continues about the desirability of promoting capital-intensive industries which are not based on Indonesia`s abundant resource base. There is also considerable discussion of the implementation of the government`s `privatisation` policies, and of the role and performance of state enterprises.
To the casual observer, Indonesia gives every impression of being on the threshold of an era of rapid technological development.
Under the auspices of the powerful Minister of Research and Technology, the first locally-produced aeroplane rolled off the assembly line in Bandung last September. Its first test flight was in late December. Plans are proceeding to produce everything from oil tankers to jet foils in the Surabaya plant. A prestigious, Harvard-style business school is being established in Jakarta to produce international-calibre MBAs. Meanwhile, in Jakarta, the ubiquitous becak, the vary antithesis of a modern technological state, is to be consigned to the scrap heap (or, as some officials have publicly suggested, to the harbour of Tanjung Priok).
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