The Chairman's Opening Statement

Jean-Michel Severino, Vice President, East Asia and Pacific Region
The World Bank
 

Excellencies, Distinguished Delegates, Ladies and Gentlemen:
Dear Friends and Colleagues:

        I am personally very happy to welcome you to the Ninth Meeting of the Consultative Group for Indonesia. I think I will not be contradicted by you if I thank in your name the Indonesian Government for this wonderful hospitality. I hope some of you at least will be able to enjoy the spirit and the pleasures of Jakarta and Indonesia and get a feel for its population and environment. You will therefore understand why we in the World Bank are so committed to this extraordinary country and passionately feel as partners in the achievements and challenges of developments of the past years. We should also be grateful to the Vice President for her opening speech, and to Governor Sabirin, who is our host today, for the hospitality of the Central Bank.

        This is truly an historic occasion. It is the first time we meet in Jakarta-- close to the real problems of Indonesia, to its achievements as well as to the people who will benefit from effective development and be impacted by our debates. It is also the first time that we meet with the new government -- elected by the people of Indonesia through a fair and free democratic process. It is the first time that the CGI was preceded by consultations with civil society -- and when representatives of civil society are able to join us today as observers. And, for the first time, we welcome Portugal to this meeting as an observer. All these are signs of how times have been changing, for the better.

        We should all feel very good about how far Indonesia has come over the past year. The political transition has been completed in a way that has received strong support at both home and abroad. The economy has stabilized and there are clear signs of recovery all around us. Poverty, which rose sharply during the crisis, now seems to have reached its peak and may be on the decline again. Perhaps most importantly, there is a new sense of optimism that Indonesia can indeed resume the path of real development -- led by a democratic and transparent government, and based on a competitive and just economy.

        But events of the past year have also taught us how fragile these political and economic gains can be. Soon after our last meeting in Paris, the situation in East Timor deteriorated rapidly and confidence in the Government's economic program was undermined by the Bank Bali scandal. The first session of Parliament was held amidst student protests and car bombs -- right on the streets outside this building. And the country continues to be wracked by regional and ethnic conflicts -- with terrible human consequences. We all have a responsibility to help the new Government meet these challenges and build the stability which is essential for sustained development.

        Our agenda today and tomorrow will take us through some of the critical issues facing the Government and the people of Indonesia at this time. I would like to highlight three broad themes for our discussion:

• First, the Government of Indonesia has recently announced a new economic recovery program -- as laid out in the Letter of Intent and the budget presented to Parliament on January 20. We must all congratulate Minister Kwik and his economic team for putting in place such a comprehensive program within 100 days of taking office. But we also know that this is only the first step -- and that sustained commitment and dedication will be required to implement this program, especially in the critical area of bank and corporate restructuring. We look forward to hearing the Government's plans for implementing reforms -- and what we can do to help.

• Second, the Government does require immediate external assistance to finance the budget for FY2000. I'm sure the CGI members will respond positively to this request. But at the same time, as we move out of the crisis period, we would like to hear more about the Government's medium-term development priorities -- and how we can reshape our aid programs accordingly. In particular, we need to look at ways to manage government debt, reallocate resources to priority areas, and improve the development effectiveness of our programs. This will help set the agenda for follow-up discussions -- both bilaterally and at the next CGI meeting.

• Third, the new Government has made a clear commitment to fight corruption in Indonesia. And it has the credibility and mandate to deliver on this commitment. But we also know that this is a tough fight -- in which we all have a role to play. We must also get down from the general rhetoric to talk about how we can really push ahead with governance reform -- whether it be in the judicial system, the forestry sector or our own projects. Last week's forestry seminar graphically highlighted the problems of illegal logging in Indonesia. And the civil society consultation raised concerns about corruption, including in projects financed by the World Bank. We must address these issues head-on in our discussions over the next two days.

        So, despite all that has been achieved over the past year, this will not be a congratulatory or complacent meeting. The basic message, as captured in the title of our economic brief, will be: "seize the opportunity". Let's work together to convert the Government's commitment and our goodwill into concerted action. We have a lot of business to do -- and tough issues to tackle. As always, I would encourage everyone, in the spirit of broad participation, to enter into this dialogue very openly and interactively. In this way, we can learn from each other and truly build a strong partnership for the benefit of the people of Indonesia.

        And now, I will call upon his Excellency, Drs. Kwik Kian Gie, Coordinating Minister for Economy, Finance and Industry, and Head of the Indonesian Delegation, to make his opening remarks and help set the direction for this meeting. I will also thank him and his colleagues from the Government, as well as the Governor, for the wonderful spirit of partnership they have demonstrated since in office and that has led us to the current meeting.