| Abstraksi Narasi |
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The four months covered by this survey, February to May 1970, have been as relatively trouble free a period for the Indonesian economy as any since 1966, and perhaps since 1957. Problems still abound and the future is hardly rosy. But there has been progress on many fronts, in economic activity, in output and investment, and in institutional reform.
The problem that has commanded the most immediate attention and will concern policy makers for a long time yet is Indonesia`s balance of payments. A combination of factors, including rising import demand, large commercial purchases of rice, langging aid disbursements and falling rubber prices, caused a sharp loss of foreign exchange reserves in the last quarter of 1969 and early 1970. In April the Government decided, with the concurrence of the IMF, to devalue the rupiah in conjunction with a comprehensive reform of the foreign exchange system which eliminated all but the last remnant of the former complex of multiple exchange rates. In the following week, the IGGI consortium agreed to Indonesia`s request for aid commitments for 1970 totalling over $600 million, and the Paris Club of western creditor countries accepted a revised form of the Abs formula for settlement of the Sukarno debts.
The rate of price inflation was kept down to 10 per cent during 1969, as contrasted with 85 per cent the year before, and there is confidence that this degree of stability can be maintained this year. As prices have become more stable, the public has become more willing to hold money balances. This made possible a 60 per cent increase in money supply without inflationary effects in 1969. A somewhat smaller increase will be possible and necessary this year to sustain rising investment and business activity. Loan approvals under the medium-term credit program which was initiated early last year had reached Rp 32 billion by the end of March and are expected to continue at a monthly rate of Rp 3-4 billion this year. After the initial difficulties which caused development investment to lag in the earlier part of the first year of the Five Year Plan, there is evidence that a good deal of real investment, both domestic and foreign, in the private as well as in the public sector, is now under way.
At the end of March, Parliament passed the budget for the fiscal year 1970/1. Following the success in raising tax revenues during 1969/70 by 40 per cent, it envisages a further 32 per cent increase in the coming year and a current budget surplus of Rp 37 billion during 1970/1. The substantial improvement in tax performance over the last three years, however, has brought the economy much closer to the limit of taxable capacity within the present institutional framework. Henceforth, reliance will need to be placed largely on rising income to finance rising government expenditure.
The rate of growth of real national product in the first year of the Plan probably fell short of the 5 per cent target. A major reason was the disappointing rice harvest, due not to poor seasons but mainly to the failure of the rice intensification program operated by foreign contractors (Bimas Gotong Rojong) to achieve the expected results. The Government has now decided to abolish the program and rely on an improved national Bimas program. Seasonal conditions promise a relatively good rice harvest this year. The output performance of Indonesia`s export industries remains patchy, with smallholder rubber, coffee, palm oil and tin, as well as the oil industry and the rapidly growing timber industry doing well, but copra, tobacoo, tea and many of the smaller traditional industries rather badly. On industrial production there is still an almost complete lack of statistical information but scattered reports indicate steady or rising output, at least in the larger plants.
In all the major problem areas which require social or basic institutional reform progress is barely perceptible. Following increasingly widespread complaints and student demonstrations, the Government in January appointed a Commission of elder statesmen to investigate and recommend action on corruption. Its report was expected in June or July. While the salary position of government employees has been improved and there have been some further measures of decontrol, reduction of the number of people on the government opportunities. Some headway is being made with law reform, the reorganisation of state enterprises, upgrading of management of public and private business, plans to improve the educational system and extension of family planning. But progress is slow and in these fields, as in economic development, largely confined to Java and North Sumatra. It has hardly yet touched the less developed regions of the country |
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