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To maintain macroeconomic stability in order to permit investor to plan for the future
Short term
To safeguard Government budget 2004 and to renew and revise budget 2005
Medium and longer term.
- Continue to improve revenue collection and to strengthen the control and management of public resources.
- To maintain budget deficit in the range of 1% and keeping the debt ratio on the downward trend.
- To reallocate public spending to infrastructure and social program (health and education and simultaneously reduce subsidy to upper income groups).
- Continue to strengthen and to diversify the financial sector so that becomes less vulnerable to shocks and establish a stable and reilient financial system
- To revitalize capital markets and non-bank financial institutions.
- To support Bank Indonesia to establish a robust and transparent monetary policy focused on controlling inflation. Ensure the coordination with BI in relating to debt management and monetary policy.•
- To support and coordinate with Bank Indonesia in further strengthening banking sector regulation and supervision.
- To improve investment climate and export competitiveness: growth and employment creation can only be achieved through increased investments in production capacity, more efficient services and infrastructure
Short-term agenda:
Addressing “high cost economy” through streamlining bureaucracy and deregulation (this will also reduce opportunity for corruption); more medium term address institutional, infrastructure and productivity bottlenecks:
- To establish through law and regulation one stop shop service for investor in order to attract high quality investment (passage of investment law, reforming the Board of Investment and true streamlining).
- To attain more flexible domestic labor market by reviewing and revisiting labor regulations, ministry decrees, and manpower law. Specific improvement includes dismissal regulation, severance allowances and contract workers. Longer term need to review the laws and social security system, setting of minimum wages, industrial relations (tripartite and bipartite).
- To improve mechanism of labor placement and enhance competitiveness of labor force in both domestic labor market as well as in international labor market (export of labor).
- To review all local and decentralization regulation and reduce all that hamper investment.
- To review and revise all tax, custom and tariff system that impede investment and benchmarking with best international practices. This effort will reduce tax discrepancies with the neighbors.
- To review all export and import regulations with the objective of streamlining, simplification and greater transparency in the first phase, and deregulation in the second phase. There are 17 export and import regulations mainly in agriculture, and some general import licenses which will be reviewed with that view.
- To evaluate implementation of all regulation and scheme in attracting international tourist including the evaluation of visa on arrival.
- To reduce uncertainty in doing business in mining, oil and gas sector in order to increase production and distribution of mining, oil and gas products. Specific improvement includes ministry of energy and ministry of forestry regulation, coordination across department.
- To improve public management of infrastructure and to accelerate infrastructure development through public and private partnership. Evaluate, review and revise several presidential decrees in related to public-private partnership.
- To create and empower independent regulatory body in key infrastructure and exploring ways to finance infrastructure development.
- (Infrastructure investment target of some $80 billion of which two thirds expected from private sector and one third from budget and donors; five priority sectors are power, toll roads, water and sanitation, transportation and telecommunications-infrastructure summit on 17-18th January to talk about public private partnership).
Establishing secondary mortgage facility.
- To reduce poverty and achieve more balanced economic development
- To improve access of the poor (farmer and villagers) to formal financial sector.
- To improve and rehabilitate village's and agriculture infrastructure.
- To facilitate a more balanced growth and development across region and sectors.
- Specifically the government will pay attention on small and medium enterprises in a transparent and balanced manner and not to benefit only certain segment of society.
- To improve community access to good quality education and health services .
In related to the agenda of “Establishing justice, fair and democratic condition” (addressing corruption and legal certainty):
- To combat corruption: to beef up anti corruption office and to strengthen attorney general office, including establishment of commissioner that supervise and monitor attorney general institution.
- To accelerate implementation of legal reform including to improve the functioning of the commercial court, anti-corruption court and Supreme Court.
- To finish pending corruption cases: specifically all big corruption cases has to be resolved within 100 days including cases that related to parliament members, governors and Bupatis (district head)
- To continue bureaucracy reform in order to improve good governance: establish bureaucracy reformation team led by Vice President.
- To create legal and regulatory certainty including to protect the sanctity of contracts.
- To resolve high profile investment disputes: Exxon, Karaha Bodas, Cemex
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