I appreciate very much for the update by Ministers and the Governor on the recent progress in the economic reforms.

    Thanks to the continuous reform efforts of the Indonesian government in line with the IMF program, macroeconomic stability has been seen in the past few months. I commend the government’s efforts in the reform that have brought this stability.

    I hope that steady progress in the reform will continue. The ninth review of the IMF program that will be due by the end of this month should be concluded on time.

    As we all know, the government is now in the process of examining what kind of exit strategy to take, as the current IMF program will end at the end of this year. We hope that the Indonesian government will smoothly graduate from the IMF program by steadily implementing needed economic reform.

    There will be three crucial issues to achieve the smooth graduation. The first is the need to complete timely the remaining three reviews under the current IMF program to show to the public the strong determination of the Indonesian government in the reforms.
The second is the issue of the financing of the fiscal 2004 budget. While we think it is manageable, it would require further efforts in reforms, in particular, in reducing fiscal deficit, among others. Furthermore, the government’s efforts to obtain the maximum disbursement from existing project and program loans from donors should be pursued. In order to do so, implementing those reform measures that are the conditions of the disbursement would be the key. Japan stands ready to provide financial support in fiscal 2004. But this also requires determined engagement of the Indonesian government in introducing measures to speed up the implementation of aid projects, such as detailing the scheme of on-lending and improving procurement procedures. Fair, transparent and effective implementation of aid projects is also critical to secure maximum support of our domestic constituency in assistance to Indonesia.
The third is the question of how to maintain the credibility in Indonesia’s economic management after the graduation. This is the question of what would be the framework of the economic management after the graduation, including the ways to cooperate with the international community. This would be entirely up to the Indonesian government to decide. But, I would like to express my hope that the government will make such a decision that would tightly secure the credibility in the Indonesian economy.

    Now that the economic stability is more or less achieved, the next important task ahead is to push the economic growth up to a higher level by facilitating private investment.

    In this regard, I welcome the government’s initiative to declare this year as “The Year of Investment”. I also welcome the government’s intention to create a cabinet team on investment promotion. An action-oriented team composed of core cabinet members should be established as promptly as possible. This team should establish formal mechanism to consult regularly with domestic and foreign business communities and should work on laying out comprehensive roadmap to improve investment conditions.

    It is no doubt that judicial reforms and governance reforms are the keys to improve investment conditions and we, therefore, remain committed to supporting the government in this regard. But there are other issues to be tackled. Developing infrastructures, such as power plants, roads, bridges and ports, which would serve as basis for vigorous business activities is one example and promoting orderly labor relations is another. In particular, on the infrastructure development, the government’s strategy and priority in this respect is not clear at this point. It is important for the Indonesian government to come up with clear priority in infrastructure development and to create effective projects in line with it. The donor community should actively support these projects through our various aid schemes.

    From domestic and foreign companies, we hear strong calls for the improvement in investment conditions on daily basis, not only in the areas of judiciary and governance reforms, but in the areas of infrastructure development, labor relations and development of supporting industries, among others. I sincerely hope that, listening carefully to these lively voices of business community, the Indonesian government will take strong and real actions to improve investment conditions.

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