THE GLOBALIZERS ACTION:AN INDONESIAN EXPERIENCE

DEDDY S. BRATAKUSUMAH, PhD

Abudhabi 2007

BACKGROUND

THE ASIAN ECONOMIC CRISIS 1997-1998, WAS THE MOST DRAMATIC EVENT,

SET THE ECONOMIC AND SOCIAL CONDITIONS BACK FOR YEARS,

INDONESIAN CRISIS IS THE MOST SEVERE IN EAST ASIA,

TRIGERED POLITICAL REFORM ACTION,ADHERENCE ACTION OF ECONOMIC AND

POLITICAL REFORM

THE IMF ROLE

IMF CAME INTO ACTION IN INDONESIA TO OVERCOME THE PROBLEM WITH MANY “RECIPES” TO BE IMPLEMENTED.

THE OFFICIAL AGREEMENT BETWEEN THE REPUBLIC OF INDONESIA GOVERNMENT AND THE IMF WAS SIGNED ON OCTOBER 31 1997

THE AGREEMENT SO CALLED LETTER OF INTENSE (LoI) BECAME THE WORKING DOCUMENT OF INDONESIAN GOVERNMENT DURING THE CRISIS.

AS THE RESULT MANY PUBLIC POLICIES BASED UPON THE LoI

THE THREE PILLARS OF POLICY

FIRSTLY, THE FRAMEWORK OF MACROECONOMICS TO ACHIEVE THE ADJUSTMENT IN EXTERNAL CURRENT ACCOUNT AS WELL AS UNITED THE ADJUSTMENT FISCAL WITH THE MONETARY POLICY AND THE EXCHANGE RATE.

SECONDLY, THE FINANCIAL SECTOR RESTRUCTURIZATION COMPREHENSIVE STRATEGIES.

THIRDLY, THE REFORM ACTION STRUCTURAL THAT INCLUDES THE AREA TO INCREASE THE GOVER-NANCE, INCLUDING THE POLICY OF INVESTMENT, THE INTERNATIONAL TRADE, DEREGULATION AND THE PRIVATIZATION, THE ENVIRONMENT SUSTAINABILITY, AND THE SOCIAL SAFETY NET PROGRAM

INDONESIA: ARRANGEMENT WITH THE IMF 1997–2003

-------------------------------------------------------------------------------------------------------------------------------------

ACCESS AMOUNT DRAWN ------------------------------- -----------------------------

APP DATE EXP DATE SDR BNS US$ BNS SDR BNS US$ BNS-------------------------------------------------------------------------------------------------------------------------------------STAND-BY ARRANGEMENT (SBA) NOV 5, 1997 AUG 25, 1998 8.3 11.4 3.7 4.9

EXTENDED FUND FACILITY (EFF) AUG 25, 1998 FEB 4, 2000 5.4 7.2 3.8 5.2

EXTENDED FUND FACILITY FEB 4, 2000 DEC 31, 2003 3.6 5.0 2.9 4.0------------------------------------------------------------------------------------------------------------------------------------

SOURCE: IMF

THE IMF RECOMMENDATION

1. THE TIGHT MONETARY POLICY, 2. FISCAL DISCIPLINE, 3. THE PRIVATIZATION, 4. DEREGULATION OF THE TRADE, 5. DEREGULATION OF INVESTMENT, 6. THE RESTRUCTURING AND

RECAPITALIZATION OF THE BANKS.

REGIME CHANGE IN INDONESIAREGIME CHANGE IN INDONESIA

May 1998-October 1999Accountability Speech

RejectedDeclined to run for

President

August 1945 - March 1968

Elected by the PPKIImpeached by MPRS

October 1999 – July 2001 Elected by MPR Impeached by MPR

SukarnoSukarno

B.J. HabibieB.J. HabibieAbdurrahman WahidAbdurrahman Wahid

October 2004 – 2009Directly elected

Susilo Bambang Susilo Bambang YudhoyonoYudhoyonoJuly 2001 – October

2004Elected by MPR Lost election to SBY

MegawatiMegawati

March 1968 - May 1998Elected by MPRSResigned under

pressure

SuhartoSuharto

THE END OF IMF ASSISTANCE

THE IMF PROGRAM WAS TERMINATED IN YEAR 2004.

WHAT WE HAVE DONE

CONSTITUTION AMENDMENTDIRECT PRESIDENTIAL ELECTIONCONTINUNING REFORMATION ON

BUREAUCRACY, AND PUBLIC INSTITUTIONS

RESTRUCTURING THE FINANCIAL SECTORRESHAPING CENTRAL-LOCAL

RELATIONSHIP

WHAT WE HAVE TO DO TO PUBLIC ADMINSTRATION

GOVERNMENT FUNCTION REDESIGN PUBLIC BUREAUCRACY PHILOSOPHY THE STRUCTURE OF PUBLIC ORGANIZATION REVISION OF THE REGULATIONS AND LAWS THE POLICY OF PUBLIC SERVANTS THE MANAGEMENT OF THE BUREAUCRATIC

REFORMS PUBLIC BUREAUCRACY WELFARE

POSITIVE GROWTH TRAJECTORY

Source: CBS .

ECONOMY IS ON A STEADY UPWARD TREND. INDONESIA’S PERFORMANCE IS VERY MUCH COMPARABLE IN THE REGION

OVER THE MEDIUM TERM, THIS ACCELERATION PROCESS SHOULD CONTINUE ASSUMING THAT ALL REFORM PROGRAMS ARE IMPLEMENTED.

2001-2003

4 %

5.25 %5 - 6 %

> 7%

2004-2005 2006 2007 - 2009 2010 - beyond

6 - 7 %

THE PROSPECTS

MANAGEABLE DEMOCRACY DYNAMISM BECOME THE 4th LARGEST

DEMOCRATIC COUNTRY

BANISHING CORRUPTIONEFFECTIVE, EFFICIENT, AND PRODUCTIVE

BUREACRACYBETTER ECONOMIC AND SOCIAL

INFRASTRUCTURES

THE PROSPECTS

HARMONIOUS, ACCOUNTABLE, AND CONTROLLED CENTRAL-LOCAL INTERACTION

MORE COMPETITIVE NATIONSWELL MANAGED ENVIRONMENT AND

NATURAL RESOURCES

THE FINAL REMARKS

1. ALTHOUGH THE IMF PRESENCE IN INDONESIA WAS PRECEDED WITH CONTROVERSIAL, BUT THE FACT IS THE PROGRAMS BROUGHT INDONESIA LEFT THE CRISIS

2. NO GENERIC PRESCRIPTION FOR ALL COUNTRIES EXPERIENCING THE ECONOMIC CRISIS. IT SHOULD BE HANDLED RATHER CASE BY CASE AND IN SPECIFIC MANNER FOR EACH COUNTRY.

3. SUPPORT FOR THE REFORM PROGRAM BY THE COUNTRY'S POLITICAL SYSTEM ALSO ANOTHER KEY FACTOR

THANK YOU