Mr. Rahmat Waluyanto
Director General for Debt Management, Ministry of Finance
Republic of Indonesia
High-Level Dialogue on Financing for Development
New York, 23 October 2007
The Indonesian delegation welcomes the convening of this Third High Level Dialogue of the General Assembly on Financing for Development and commends the President of General Assembly for this initiative. I would also take this opportunity to associate myself with the statement delivered by the distinguished representative of Pakistan on behalf of the Group of 77 and China.
It has been 7 years since the Millennium Summit initiated the MDGs. It has also been 5 years since the Conference in Monterey produced the consensus recommendations that would facilitate governments in pursuing these development goals. Since that time we have reiterated our commitment for development through various internationally agreed development goals, including through the recently held 2005 Summit, by which our Heads of States voiced their commitment to reaching the MDGs by 2015. Yet despite such political desire, our efforts to create deep impact in development have been matched by the indiscriminate neutralizing effects of globalization.
For this reason, with the MDGs deadline only years away, it is imperative that we formulate a clear road map that ensures a financing for development strategy that reflects the needs of the developing countries while also encouraging greater participation by the international community. Today’s event, therefore, is most timely in preparation for the upcoming International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus to be held in Doha, Qatar in the Second half of 2008. The outcome of this meeting will undoubtedly contribute to our efforts to implement the Monterrey Consensus.
As reflected in the Secretary General’s report, there are some measure of progress and remarkable improvement since the adoption of the Monterrey Consensus, including in macro economic management that include external debt, fiscal management, financial sector development and social expenditure per capita in the majority of developing countries.
We note, however, that it is still yet to be made as widely available for most developing countries that still must endure vicious cycles of poverty, lack of productive capacity and supply side constraints, and a vulnerability to external economic and financial shocks. External debt continues to weigh down fiscal efforts, and the threat of a debt crisis remains prevalent. The levels of ODA severely needed for global development, including the commitment of 0.7% target, has yet to demonstrate a meaningful improvement since 2005. Trade as one of the engines of growth has also yet to play its inherent role of alleviating poverty. And the continuously evolving global financial system remains nebulous, some countries feel, in fostering predictability and growth for most developing countries.
Developing countries have been mindful of these findings and as consequence have been forced to take a frugal approach to economic and social development policy formulation. Key areas that require continued international assistance has been assistance in mobilizing domestic resources and building the capacity of recipient countries with a view to enhancing their development absorption capacity. Despite such limitations and careful considerations, we have succeeded in forging intergovernmental cooperation at the bilateral and regional.
Indonesia, with her population of 220 million is cognizant of this situation and has been playing an active role in not only promoting the attainment of the MDGs nationally but also in fostering an environment of economic growth and stability at the regional level by formulating a framework that promotes prosperity and integration into the world economy.
Toward the end of 1997, following years of exceptional economic growth, Indonesia was plunged into a severe and protracted monetary crisis that led to a change in government. The economic and social costs were enormous, and — ten years on —they continue to impose a burden on our people. But despite the unprecedented magnitude of the upheaval, the crisis also had a profound outcome — it accelerated economic, political and social reforms and laid the foundation for Indonesia’s robust and stable democracy. It also presented challenges and opportunities for Indonesia to undertake structural reforms, and to improve governance and regulatory activities as well as eradicate corruption.
Today, we are beginning to reap the benefits of a long and painful restructuring process, and are positioning ourselves to grasp the new opportunities of the present.
With countries becoming more closely integrated, each country has an ever-increasing stake in the soundness of the policies of others. Accordingly, the international community can play a constructive role in encouraging one another to adopt and maintain sound policies. This could include swap arrangement among a number of Asian central banks as an example of how constructive cooperation is working to maintain regional stability. It would be worthwhile to explore how such regional initiatives can be expanded into a multilateral one, including the establishment of Chiang Mai Initiative in which the pooling of liquidity funds from East Asia Countries for pre-emptive use in a financial crisis is one of the initiatives to be supported
As part of our contribution to continually improve the administrative environment in pursuit of good governance, Indonesia in cooperation with UN-Department of Economic and Social Affairs will be convening the first Regional Forum on Reinventing Government in Asia: Towards Transparent and Accountable Governance in Jakarta 14-16 November 2007. This meeting, chaired by Indonesia’s Minister of State for Administrative Reform, Minister of Planning and Minister of Finance, will also be joined by 9 other ministers from the Asian region.
In the area of economic growth, Indonesia continues to utilize the optimum use of available policy space to formulate strategies for development based on a participatory human-centered approach to development. To attain and achieve the objectives of the MDGs, Indonesia has embarked on a triple track economic strategy based on “pro-growth”, “pro-job creation” and “pro-poor”.
Through pro growth strategies, the Indonesian government has promoted economic growth through increasing export and improving investment climate. To supplement these efforts, we have encouraged the use of technology-intensive ventures that add value for exports. While through pro job strategies, my government intends to accelerate real sector growth that stimulates labor absorptive capacity. Since its implementation, this program has reduced open unemployment up to 550 thousand people between February 2006 and February 2007. Through pro-poor strategies, my government has promoted the revitalization of agriculture, forest, coastal area and rural sectors as a means to eradicate poverty.
Through these economic strategies, Indonesia’s economy has attained a healthy growth of 5.5 percent in 2006. We expect our economic growth to rise to 6.3 percent this year and to an average of 6.6 percent in the next five years. We also intend to reduce the unemployment rate from 9.5 percent to 5.1 percent and slice poverty rate by half to 8.1 percent by 2009. In order to do this, we need a total of $426 billion worth of investment to attain the desired economic growth of 6.6 percent every year until 2009. In achieving this target, we stress the importance of the sound capital market policies as an alternative source of financing for the real sector.
We all agree that the fulfillment of the Monterrey Consensus is extremely important. We realize that efforts at the domestic level alone will not be enough without similar ones undertaken by the international community with a view to creating a conducive international environment in the form of greater market access for export products from developing countries and the enhancement of FDI, deeper debt forgiveness, the elimination of systemic inequities the achievement of the ODA target, as well as the achievement of the MDGs. Further, donor countries should coordinate their aid and ODA policies and procedures to enhance their efficiency and effectiveness.
We are of the view that now it is time for the multilateral forum, particularly the United Nations, relevant development organizations, and international financial institutions, to play a greater role. Among those initiatives could be the role of fostering debt to equity initiatives.
Attaining the MDGs by the designated timeline requires strong political and practical decisions that address not only the economic development needs, but also the endemic social needs of developing countries. Governments and all stakeholders have a moral obligation to alleviate the poor worldwide and the responsibility to foster development at the national level. The role of Diasporas, in its widest sense, can contribute to bringing globalization to the betterment of its origin societies.
To conclude, Indonesia is confident that there are pertinent elements produced by this Dialogue that should be fully considered by the upcoming ECOSOC Development Cooperation Forum and also the International Conference on Financing for Development in Doha, Qatar ss a key milestone to promote coherency in implementing international policies on financing for development.
I thank you
Permanent Mission of the Republic of Indonesia to the United Nations, New York
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