Outgoing WB rep in Jakarta says alternatives to CGI would be useful

http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20070224.L01

Business and Investment - February 24, 2007

The Jakarta Post, Jakarta

While supporting the winding up of the Consultative Group on Indonesia (CGI), outgoing World Bank country director Andrew Steer said dialog and discussions with the international donor community will continue to be useful for the nation's development programs.

"I think it would be a pity if there is not some kind of a forum to discuss important issues. I mean, Indonesia does need to think about how to bring in trade, investment, ideas and technology," he said Friday on the sidelines of a farewell meeting with The Jakarta Post.

"It would be useful if it is replaced by something, not necessarily one big forum. It could be thematic forums on infrastructure, on education, on health," he explained.

He said that while ministers had made it very clear that dialog will continue, "down below in the bureaucracy, there is a bit of confusion."

The government has said it has no plans to set up any kind of formal or regular forum as a substitute for the CGI, though it has stressed that it will continue to engage in dialog with international lenders and donors.

"No, we consider it unnecessary to establish another forum. But we may hold informal discussion forums, like seminars," said Mahendra Siregar, the deputy for international economic cooperation at the Coordinating Ministry for the Economy, during a discussion Tuesday on the future of Indonesian government financing after the CGI.

In farewell remarks on Indonesia, Steer said he was optimistic about the nation's economy, saying it was on the right track to fully recover from the 1997 Asian financial crisis.

"When I first came here about 4.5 years ago, the No. 1 item on the budget was interest (payments on foreign debts)," he said. "Indonesia had to allocate more than 25 percent of the budget to pay interest. Now, it only allocates 10 percent," he said.

Steer also praised Indonesia's achievements in reducing the debt-to-GDP ratio from 100 percent in 1999 to the current figure of 38 percent.

"It is also a remarkable fact that Indonesia has now launched what may be the biggest educational reform in the world," he said, adding that the government had doubled spending on education over the last few years. "If it goes ahead, it could have a remarkable impact."

However, Steer said Indonesia must be able to speed up the building of roads, rail links, ports and power plants to attract investment and boost growth. "It would actually be very interesting to know why education spending has rapidly increased whereas infrastructure spending has not," he said.