PRESS RELEASE: FOR IMMEDIATE RELEASE

Jakarta, 12 July 2004 – The Coordinating Minister for Economic Affairs Dorodjatun Kuntjoro-Jakti reported last week to President Megawati the progress of the implementation of the Government’s Economic Plan for the period between September 2003 and June 2004. The report is part of the Presidential Instruction 5/2003 issued on 5 September 2003 committed the government to implement in a timely manner a series of measures under the post –IMF Economic Plan, or better known as the “White Paper”.

The report reviews the progress, achievements and some delays faced in the ten months of the White Paper implementation. The White Paper program contains three key policy goals to support the government’s “graduation” from the IMF program. These are:

Maintain macroeconomic stability through measures on continued fiscal sustainability, low inflation, stability of the Rupiah, strong foreign exchange reserves and an efficient national payment system;

Continuing the restructuring and reforming the bank and non-bank financial sectors including anti-money laundering and improve the operations and governance of state-owned enterprises, and

Increase the level of investment, exports and employment by improving the investment climate, labor relations, industry and trade facilitation, legal reforms, security and governance.

Bank Indonesia (BI) as an independent central bank is responsible for the monetary program in the “White Paper” and supports the overall program to maintain macroeconomic stability and continue restructuring and reform of bank and non-bank financial sectors. BI is also implementing an ongoing program to further improve its regulatory and supervisory capacity to be in line with Basle Core principles and international best practices.

The government and BI monitoring teams coordinate closely on the timely implementation of their respective program.

Progress Report
In his report to the President, Coordinating Minister Dorodjatun Kuntjoro-Jakti informed the importance of timely implementation of the “White Paper” programs in allowing a smooth transition from the IMF program and ensures continued macroeconomic stability. In general, the completion of action plans during the ten months of implementation of the white paper has reached 80 per cent; a considerable progress compared to 75 percent at end of May 2004. Out of 148 plans stated in the White Paper, the Government has completed 119 plans which have time frame until June 2004. The other 29 action plans have achieved significant progress but yet to be completed.

The Coordinating Minister also informed the President that the implementation of the first two set of programs dealing with maintaining macroeconomic stability and financial restructuring have been praised by both local and international business communities as they have helped maintaining economic stability. On the third program dealing with increasing investment, exports and employment, although most of the action plans have been completed they are yet to bring about a concrete impact to the efforts to increase investment and exports. It is therefore the Government has established the National Team responsible for boosting exports and investment, in cooperation with business communities. The team, who is directly chaired by the President and has the Coordinating Minister as the chief executive, has identified problems hindering exports and investment, and formulated a number of actions to be implemented by relevant institutions within a set timeframe.

The Coordinating Minister then specified some of the delayed action plans that require attention and priority from the Government to be completed, as decided by the Cabinet Meeting on 8 April 2004. These plans include the submission of three trade bills -- trade bill (which was targeted for November 2003), information and electronic transaction bill (targeted for December 2003), and taxation bill (targeted for January 2004) – to the Parliament. The other delayed actions plans are: presidential decree on remuneration system for the Financial Intelligence Unit for Anti-Money Laundering/PPATK (targeted for October 2003), presidential decree on the formation of a wage board as an implementation of a new labor law (targeted for December 2004), and government regulation on upstream and downstream oil and gas business.