| Abstraksi Narasi |
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In the four months since the last survey was written , preparations for the general elections to be held in July hve increasingly become the centre of public interest in Indonesia. Domestic politics have largely displaced economic problems, and for the time being even the problem of corruption, from the front pages of the newpapers. Meanwhile, the economy has been performing well, judged by nearly all indicators. The relative stability attained in the past two years has been maintained. At the same time, output has been rising in almost all sectors. Investment, public and private, domestic and foreign, has got more effectively under way. The pace of economic development is still uneven as between sectors and regions and as yet hardly sufficient overall to make an impact on Indonesia`s long-term problems of dependence on external assistance, unemployment and inadequate resources for minimum standards of income and social welfare. But with the most critical short-term problems under control, the government and its advisers have been able to give more attention to forward planning, in the social as well as economic field.
At a meeting of the IGGI consortium held at Rotterdem in December, the aid donor countries responded to encouraging reports on the performance of the Indonesian economy by accepting in principle Indonesia`s request for program and project aid in 1971/2 totalling $640 million. This is $40 million more than last year`s request but relative to aid actually received in 1970/1 most of the increase is accounted for by improved scope for effective use of project aid. Rising import demand and increased debt service are expected to leave the deficit in Indonesia`s balance of payments on current account (excluding project imports0 substantially unchanged, despite a remarkable 17 per cent rise in export earnings during 1970. The reform of the foreign exchange system of 17 April 1970 which involved a partial devaluation of the rupiah in the process of unifying the former BE and DP exchange markets appears to have helped to stimulate exports without any of the adverse effects on the domestic price level that some had feared. the last vestige of the former system of multiple exchange rates disappeared in December with the unification of the general (DU) and credit (DK) exchange rates.
The rapid rise in imports reflects considerable and widespread expansion in domestic economic activity. The textile and most other manufacturing industries have recorded substantial increases in output. Building and construction activity (for which statistic are still almost wholly lacking) is visibly expanding as government development expenditure, including a good many aid-financed projects, and foreign and domestic business investment have got over some of the problems that held them back last year.
The record in agriculture is mixed. Rice production in 1970, according to the bestofficial estimates, reached a record figure of at least 11.2 million tons, and a good 1971/2 wet season harvest is forrecast, aided by the Improved Bimas program which appears to be going reasonably well in its experimental stage. Production of other food crops, especially maize and cassava, on the other hand, has fallen off badly. Rubber output is well up, despite falling world prices, and timber production has grown so rapidly that timber is now Indonesia`s third largest export earner. But the sugar industry shows no signs of getting out of its troubles, and the efforts of the Minister of Trade to straighten out some of the problems of other traditional export industries, such as copra, coffe, and tobacco, are meeting with mixed success. In this field, as in relation to the bigger issues of Indonesia`s industrialisation strategy, an important debate is going on over the desirable degree of government intervention in the market process and of protection for domestic enterprise.
In 1970, as in the previous year, quite rapid expansion of bank credit and money supply proved compatible with reasonable price stability. The price level, as measured by the Djakarta cost of living index, remained virtually constant from February to October and rose by only 9 per cent over the year as a whole. Despite some presure on their liquidity, the banks continued to expand credit at ahigh rate throughout the year, much of it for fixed investment under the medium-term credit program.
As the financial year 1970/1 drew to a close, the ambitious target of a routine budget surplus of Rp. 37 billion, based on a 42 per cent increase in tax revenues during the years, looked like being very nearly achieved. Meanwhile, on 6 January, the President presented to Parliament the budget for 1971/2 wich has been more carefully prepared than any Indonesian budget for many years. It aims at a further 20 per cent increase in tax revenues, a good part of which is to be used to grant a further one-third increase in government salaries. The emphasis in the development budget is still on economic projects, only a small share going to social welfare . But with the help of technical assistance from many foreign sources, far-reaching plans are now being made for improvement of education, health and other social welfare services which should gradually bear fruit over the next decade. |
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