Indonesia Adjustment, Growth and Sustainable Development May 2, 1968 Country Department V Asia Regional Office FOR OFFICIAL USE ONLY e~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their offidal duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY UIVAIENTS Before November 15. 1978 US$1.00 - Rp. 415 Annual Average 1979-87 1979 US$1.00 - Rp. 623 1980 US$1.00 - Rp. 627 1981 US$1.00 - Rp. 632 1982 US$1.00 - Rp. 661 1983 US$1.00 - Rp. 909 1984 US$1.00 - Rp. 1,026 la 1985 US$1.00 - Rp. 1,111 1986 US$1.00 - Rp. 1,283 1k 1987 US$1.00 - Rp. 1,644 ADril 30. 1988 US$1.00 - Rp. 1,669 EISC,ALEg Government April 1 to March 31 Bank Indonesia - April 1 to March 31 State Banks January 1 to December 31 La On March 30, 1983 the Rupish was devalued from US$1.00 - Rp. 703 to US$1.00 - Rp. 970. i On September 12, 1986, the Rupiah was devalued from US$1.00 - Rp. 1,134 to US$1.00 - Rp. 1,644. FOR OFFICLAL USE ONLY TITLE I Indonesias Adjustment, Growth and Sustainable Development COUNTRY : Indonesia REGION s Asia SECTOR s Country Economic REPORT TYPE CLASSIFICATIONS MMtY LANGUAGE 7222-IND ERA Official Use 5188 English PUBDATE May 1988 ABSTRACT : This report reviews progress on economic adjustment in Indonesia (Chapter 1) and the prospects for economic recovery and growth over the medium term (Chapter 2). Particular attention is given to selected issues of development strategy: mobilizing foreign exchange and public resources (Chapter 3), policies for structural change (Chapter 4), environment and natural resource management (Chapter 5) and public spending priorities (Chapter 6). This document has a restriced distribution and may be used by recipits only in the performace of their offcial duties Its contents may not otherwise be disclosed wihout World Bak authoultion. cgmm o iti AOr cu -- Table of Coatents Page No. SUNMARY AND CONCLUSIONS ......................................... . v to xxi CHAPTER 1- PROGRESS ON ECONOMIC ADJUSTMENT ....................... 1 A. Introduction 1 B. The Government's Adjustment Program .1 C. Impact on Economic Performance. 3 The First Adjustmznt Period: 1982-85. 3 The Second Adjustment Period: 1986-87 5 D. Impact on Employment .10 Recent Labor Market Trends .10 Indonesia's Employment Problem .13 CHAPTER 2 - A FRAMEWORK FOR ECONOMIC RECOVERY AND GROWTH .15 A. Introduction .15 B. Development Strategy and Policy Priorities 15 Restoring Stability .15 Preparing for Medium-term Growth .16 C. Medium-term Prospects .19 The External Environment .19 The Employment Challenge .22 Economic Recovery and Growth .23 Investment and Savings. 27 The Balance of Payments .31 This report was prepared by a team led by Mark Baird. The principal authors were Sadiq Ahmed, Deepak Bhattasali and John Wilton. Other major contributors were AMar Bhattacharya, Ernesto May, Kyle Peters and Priscilla Urbano. Yasmine Hamid and Cyrus Talati provided statistical support. Chapter 5 draws on the findings of an environment mission, led by Gloria Davis and Richard Ackermann, which visited Indonesia in September 1987. A draft of this Report was discussed with the Government in April 1988. l w~~~~~~~~~~~ il * CHAPT3R 3 - ifLiziNG FOREiGN ECCUANCE AND PUBLIC REsOURCES ...... 35 A. Introduction ................................................... 35 S. Non-oil Export Devulopuent . ...................... . 35 Agricultural Conmodities ...................... 37 Metals and Minerals ....................... . 39 Manufactured Goods ............................ 39 C. Public Resource Mobilization ...................... 41 Non-Oil Tax Effort ..... .................... ....... 41 Cost Recovery ................. ................ 45 D. External Borrowing Strategy ................ ....... 50 Fin ncing Requirement . ............... ........ 50 Debt and Debt Servicing ............ ........... 54 CHAPTER 4 I /5E5S 1 STRUC TRAL CHANGE . ....................... 57 A. Introduction ... ................................... 57 Q. Trade Policy Reforms . ............................ . 58 Some Initial Steps . .......................... . 58 Recent Trade Reform Measures . ................. 61 Agenda for Follow-up . ....................... .. 66 C. Enterprise Deregulation ........ ......................... . 69 Recent Deregulation Measures .................. 70 Agenda for Follow-up . ........................ . 74 D. Financial Sector Development ...................... 76 Recent Financial Sector Developments .......... 77 Current Issues In the Financial Sector ........ 79 Restructuring Assistance ...................... 61 Cost of Bank Intermediation .................. 82 Capital Market Development ........ ...... ....... 83 CHAPTER 5 - ENVIRONMENT AND NATURAL RESOURCE MANAGEMENT ........... 85 A. Introductlon .............. .. ................ 8S B. Natural Resources and Sustainable Development ..... 87 C. Critical Issues in Environmental Managemnt .. ..... 91 Forestry Management and Land Use In the Outer Islands ......................................... 91 Water Resource Mnagement ln Java ............. 95 Pollution Issues Related to the Industry and Energy Sectors ...... .................. . 101 Conclusion .......................... .... 105 D. Institutional Issues and the Role of Donors ....... 106 - ili- PNo. CHAPTER 6 - SEB ICP IPO I .......................... .. III A. Introduction ....................... ............... 111 B. The 0&K Problem ................................... 111 Recent Policy Actions .............. ........... 111 The Future Policy Agenda .................. .... 112 C. Public Investment Strategy ...... .................. 116 Promoting Non-oil Exports, Employment and Incomes ................................. 118 Human Resource Developmuent .................. .. 121 Environmental Concerns ............. ........... 126 Project Implementation Capacity .............. ; 127 ANuNL I - Ri EmOQIC DEEONNS .......................... 130 STATISTICAL ANNEX ........... .................................... 151 MAP Text Tables Takble No. ZP& No 1.1 Recent Economic Developments. 4 1.2 Impact of External Shocks on Indonesia's Public Debt Payments, 1985-87 .. 5 1.3 Central Government Budget, 1982/83-1987/88. 7 1.4 Balance of Payments, 1982/83-1987/88 .. 8 1.5 Employment Growth by Major Sector of Activity in Java, Outer Islands qnd Indonesia, 1971-85 .... 11 1.6 Implied Employment Elasticities for Indonesia, 1971-85 12 1.7 Indicators of Labor Earnings, 1976-86. 13 Chan 2 2.1 Selected Indicators of International Economic Activity, 1987-2000 .20 2.2 Indonesia's Terms of Trade, 1982/83-2000/01 .21 2.3 Population and Labor Force Growth Rates, 1985-2000 22 2.4 Growth and Composition of GDP, 1987-2000 .24 2.5 Projected Expansion of Employment, 1990-2000. 25 2.6 Growth and Composition of Expenditure on GDP, 1987-2000 26 2.7 Projected Investment and Its Financing, 1987/88-2000/01 28 2.8 Projected Structure of Public Finance, 1987/88-2000/01 29 2.9 Illustrative Monetary Projections, 1990/91-2000/01. 30 2.10 Balance of Payments, 1987/88-2000/01 ..................... 32 2.11 Merchandise Imports, 1987/88-2000/01. 33 -iv - Page No. Cbonter 3 3.1 Non-Oil Merchandise Exports, 1987/88-2000/01 .36 3.2 Tax Compliance Indicators. 1984-1987 .42 3.3 External Capital Requirements and Sources, 1985/86-2000/01 .51 3.4 Projected Comitments of External Public Loans and Grants, 1987/88-2000/01 .52 3.5 Medium- and Long-Term Debt. 1985-2000 .55 Chapter 4 4.1 Recent Changes in the Tariff Schedule .59 4.2 Implementation of May 6 Scheme .60 4.3 Ispact of Reform Packages on Import Licensing Coverage Since 1986 .61 4.4 Structure of Nominal and Effective Protection .63 4.5 Effect of Reform Packages on Manufacturing Sector Since 1986 .64 4.6 License Status of Items Covered by Decrees Since October 1986 .67 4.7 Structure and Growth of Organized Financial Sector 78 Ghgmer 5 5.1 Direct Contribution of Primary Prodscetion .88 5.2 The Multiple Functions of Indonesia's Renewable Resource System .89 5.3 Rate of Deforestation in Indonesia, 1980-86 .93 5.4 Present and Projected Surface Water Use in Java .97 5.5 Types of Pollution Loads on Java .103 Chanter 6 6.1 Sectoral Distribution of Development Expenditure, 1979/80-1988/89 .117 mu An OCUIN Progr,gs on &conomic Adjustmen (i) The external environment faced by Indonesia has worsened considerably sinc, the early 1980s. Over the past five years, real oil prices (adjusted for rising ioport costs) have fallen by more than 50%. Nost of this decline has occurred since early 1986. At the same time, Indonesia's external debt burden has been sharply increased by the depreciation of the US Dollar since mid-1985. Without the appropriate policy response, these factors could have easily combined to undermine Indonesia's balance of payments posltion and cause serious dislocation in the domestic economy. (ii) The Government's adjustment program. The Government has effectively responded to this challenge with a strong growth-oriented adjustment program. This program was initiated in 1983 and has been intensified since the collapse of oil prices in 1986. There are four key elements: (a) The Government has established a very successful record of sound macroeconomic management, based on orudent fiscal and monetary pnoliicg. Budget austerity and more careful selection of projects have reduced public investment by about one quarter in real terms over the past five years. (b) The objectives of demand restraint and structAral change have both been served by appropriate exchange rats Mng . Major devaluations were implemented in March 1983 and September 1986, and the competitiveness of the exchange rate has been preserved through prudent fiscal and monetary policies. (c) To help ease the Government's budgetary position and restore domestic balance, domestic resource mobilization has been strengthened through financial sector (1983) and taxation (1984- 86) reforms. Subsequently, time and savings deposits and non-oil tax revenues have both increased rapidly. (d) The Government has made substantial progress over the past three years in improving the trade and industrial policLj reime. These reforms are aimed at developing a more efficient manufacturing sector, that can make a significant contribution to employment generation and non-oil export development over the medium term. (iii) Imact on economic performance. The Government's adjustment program succeeded in reducing the current account deficit from US$7.2 billion (7.7% of GNP) in 1982/83 to US$1.9 billion (2.4% of GNP) by 1985/86. Domestic -vi- inflation was also brought under control. However, just when Indonesia seemed to have largely overcome its macroeconomic adjustment problema, the oil market collapsed. Crude oil prices fell from US$28/barrel in January 1986 to below US$10/barrel in August 1986. Although there has subsequently been some recovery, average oll prices for 1987/88 are estiLated to have been only about two thirds of their 1985/86 level. As a result, net oil/LNG earnings fell by US$2 billion over these two years. At the same time, Indonesia's external debt pavmenrs rose by about US$2 billion; at least US$1.5 billion of this increase ls due to exchange rate changes. The combined impact of lower oil prices and exchange rate changes accounts for all of the increase in the oMblic debt service ratio since 1985. The total debt service ratio rose sharply from 250 in 1985 to 37% in 1986. Because of the strong performance of exports, this ratio is estimated to bave declined somewhat to 35% in 1987. (iv) Indonesia was well placed to handle these severe external shocks because of the series of adjustment measures taken by the Government since 1983. These efforts have been lntensified over the past two years. The Rupiah was devalued in September 1986 and government spending has been tightly controlled. Since 1985/86, the real level of capital spending in the Budget has been reduced by about 25%. This fiscal austerlty has been supported by a tightening of monetary policy. These macroeconomic policies have helped to contain import demand. More importantly, domestic inflation has been held to about 98 p.a., thus preserving the competitive advantage provided by the devaluation and improving the profitability of export activities. Recent trade and industrial policy reforms have further improved the environment for non-oil export development. In response, non-oil export earnings are estimated to have soared to US$9.4 billion in 1987/88, an increase of close to 40% in nominal terms and about 248 in real terms over 1986/87. About two thirds of this increment has been contributed by a rapidly expanding and diversifying base of manufactured exports. (v) Because of the strong growth of non-oil exports and demand restraint on imports, the current account deficit was contained to US$4.2 billion (6.2% of GNP) in 1986/87 and reduced to an estimated US$2.0 billion (3.1% of GNP) in 1987/88. The financing of these deficits and higher amortization payments has been considerably eased by the provision of special external assistance, in the form of fast-disbursing program aid and local-cost financing. During 1987/88, disbursements of special assistance totalled about US$1.4 billion and financed 12% of total non-oil imports. As such, special assistance has played a very valuable role in helping the Government push ahead with its trade deregulation measures and in facilitating the recovery of private investment and growth. Disbursements of project aid have also risen sharply, due in large part to the high-level attention given by the Government to implementation problems. By the end of 1987/88, Bank Indonesia was able to rebuild its net official reserves to US$5.6 billion, equivalent to 4.4 months of imports. This relatively high level of reserves is considered appropriate, given Indonesia's open capital account and the need to ride out occassional episodes of speculation. - vii - (vi) The Government's balanced adjustmnt program has also helped to sustain a better-than-expected rate of economic growth, despite the loss of oil revenues. Total GDP grew on average by 3.7% p.a. in 1986 and 1987. Host of Ichis growth came from the non-oil economy. Within the non-oil economy, a decline in the growth rates of the agriculture and mining sectors was more than offset by improvements In the performance of the manufacturing, construction and serv-ice sectors. Overall performance was buoyed by the strong growth of non-oil exports, while restraining factors were the drought in 1987 and cuts in government spending. The coubination of GDP growth and an improvement in Indonesia's terms of trade helped to support a real increase in national income of 4.2% in 1987, as compared to a decline of 2.5% in 1986. There were also encouraging signs of a recovery in private investment, by both domestic and foreign joint-venture investors, in response to better market conditions and improvements in the regulatory environment. In the manufacturing sector, this revival in investment seems to be broad-based, cutting across all industries and firm-size classes. A noteworthy element is the increase in investment for export activities. (vii) ImRact on emuloyment. Over the past five years, the non-oil economy has grown on average by about 4% p.a. While this is a better performance than originally anticipated, given the adverse impact of low oil prices, it is significantly below the rapid pace of growth achieved in the 1970s. This slowdown in growth has led to legitimate concerns about the impact on employment. Available data show that employment kept pace with labor force growth during the 1980-85 period, due to strong labor absorption in agriculture and the expansion of low wage employment in the rural non-farm and urban informal sectors. As a result, Indonesia did not face a major labor market disequilibrium, in te'rms of aggregate unemployment. However, there are worrying signs of open unemployment in urban areas (over 5% in 1985), especially among educated youths. The large concentration of the work force in low productivity and low earnings activities, especially in trade and transport, is also a matter of serious concern. There are indications that labor earnings in the informal sector have been adversely affected by the recent slowdown in agricultural growth and the sharp cuts in government spending. These aspects of the employment problem reinforce the importance of improving the quality of education and training programs, and of finding new sources of growth, such as from non-oil exports, over the medium term. A Framework for Economic Recovery and Growth (viii) Restoring stability. Continued progress on adjustment will be required over the next couple of years. Given the uncertain market prospects for oil and the large overhang of external debt, it is necessary to reduce further the current account deficit and to ensure that future external shocks can be handled without undue disruption to the domestic economy. As in the recent past, part of this adjustment will come from efforts to increase non-oil exports and non-oil taxes. In addition, there is a need for continued caution in macroeconomic management. The key elements of an appropriate macroeconomic - viii - program are: (a) tight expenditure manageDnt to reduce the budget deficit; (b) i ~careful scrutiny of the public investment program to maximlze returns from limited resources; (c) monetary policies to restrain aggregate demand and curb inflationary pressures; and (d) timely steps to ensure that the competitive gains from the real exchange rate adjustment are preserved. During this period of adjustment, Indonesia will continue to depend upon special external assistance to cover the financing gaps in the balance of payments and the Budget. Requirements for special assistance are projected to total US$2.4 billion in 1988/89 and US$1.5 billion in 1989/90. With this support, Indonesia will be able to finance the imports and investments required to boost growth in the non-oil economy to 5% p.a. by the end of the decade. (ix) The Budget for 1988/89 reflects the Government's commitment to continue with the fiscal restraint and spending priorities followed over the past two years. Recognizing the uncertainties in the oil market, the Budget has assumed an average oil price of US$16/barrel, US$1 lower than realized in 1987/88. For the third year in a row, the Government has decided to freeze civil service salaries and real capital spendinS is projected to fall. Because of this expenditure restraint, and much higher reliance on domestic revenues, net domestic expenditures are expected to fall to about 1% of GDP, compared to 4% of GDP in 1987/88. This trend demonstrates the austere stance of the Budget. If complementary measures are taken to improve the financial position of public enterprises, it should be possible to reduce credit growth to the public sector. This would enable the banking system to support an expansion of private sector activity within an appropriate and conservative monetary policy. kPegzaring for medium-term growth. The foremost development challenge facing Indonesia is to provide income and employment opportunities to a Lapidly expanding labor force. During the 1990s, an additional 1.7 million workers are expected to enter the labor force every year. In addition to finding productive employment for these new entrants, Indonesia will need to improve the earning prospects for existing workers and address the urban unemployment problem. Employment prospects will crucially depend on the pace and pattern of real economic growth. Overall, the non-oil economy needs to grow by 5-6% p.a. during the 1990s to absorb the labor force at rising levels of productivity and income. Given the flexibility that the labor market has shown in the past, the policies for growth and employment are largely complementary. For example, non-oil export development will support growth and lead to a more labor-intensive pattern of production. Similarly, policies aimed at encouraging an efficient and more diversified growth of agriculture are essential to provide better income opportunities to farmers and support the development of rural off- farm employment. Targetted measures will be needed, however, to improve labor absorption in the services sector, boost employment prospects in the Outer Islands and improve the quality of the labor force. Of particular importance in chis regard are the Government's programs for funding O&M, developing rural infrastructure and improving the quality of education, and programs geared to reducing fertility and improving family health. The Government also has to ensure that its policies do not unintentionally discourage employment (e.g., by hindering informal activities or subsidizing farm mechanization). - ix - (xi) A strong investment effort Ls essential if the Indonesian economy is to sustain the projected growth rates of economic activity and non-oil exports. The average fixed investment rate (at current prices) has weakened in recent years, falling from 24% in the early 1980s to an estimated 20% in 1987. Much of this adjustment has occurred in the public sector. In the short tetra, some recovery ln economic activity can be achieved through improvements in capacity utilization. Longer-term gains in the efficiency of capital use are also possible, especially if more attention is given to proper operations and maintenance. However, sustained development during the 1990s will require a substantial buildup of production capacity in the agriculture and sanufacturing sectors (largely through private investment), as well as supporting improvements in the economic infrastructure (e.g., irrigation, power, telecommunications. transport). As a result, it is estimated that the fixed investment rate will need to be maintained around 20% over the next two years, and then raised to 23% by the mid-1990s. An increasing share of this investment will have to come from the private sector, especially to support the export drive. Accordingly, private investment is projected to grow by 8% p.a. during the 19908, supported by financial policies to mobilize private savings and continued progress toward a "low-cost" business environment. It will also be important to strengthen public resource mobilization, to reduce the Budget's dependence on special external assistance and to support an expansion of public investment (by 7% p.a.) over the medium term. (xiL) A critical constraint on the pace of economic recovery and growth will be the availability of foreign exchange. Import demand will rise with higher production, incomes and investment, as well as in response to the ongoing program of trade policy reforms. At the same time, oil/LNG exports are not going to generate as much foreign exchange as in past years. Hence, the central role of non-oil exports in the Government's development strategy. The balance of payments projections in Chapter 2 suggest that non-oil export earnings will have to more than double over the next seven years, reaching US$20 billion by 1994/95. This represents a real growth rate of 11% p.a. during the next two years and 6-70 p.a. over the medium term. With this strong non-oil export effort, and continued prudence in macroeconomic management, the current account deficit is projected to be steadily reduced from US$2.0 billion (3.14 of GNP) in 1987/88 to US$1.4 billion (1.6% of GCP) by 1990/91. Subsequently, the current account deficit is assumed to stabilize at less than 14 of GIP. This is based on rather conservative medium-term estimates of external borrowing capacity and reserve requirements, to provide flexibility to respond to external shocks without unduly disrupting economic growth. (xiii) Recovery in economic growth is one of Indonesia's primary development goals for the maedium term. Yet, to be sustainable, this growth will hsve to be achieved with due regard for the environment and the natural resource basa of the country. As in the past, the major portion of economic activity in Indonesia will be linked directly to the development and primary processing of natural resources. Indonesia is fortunate to have a vast and diverse natural resource base to support a growth-oriented development strategy. In addition, many of the Covernment's policies for efficient economic growth and reduced population growth will also have favorable lmpacts on the environment and natural resource management. Esven so, economic growth will put pres~ .re on the Outer Islands' forest resources and intensify demands for the limite.A resources, especially water, on Java. Industrial and energy development will also add to water and air pollution, unless appropriate preventive measures are taken. For these reasons, continued improvements in standards of living will depend crucially on sound environmental management. Furthermore, environmental problems are inextricably linked to population pressures and poverty. These interrelationships need to be addressed in an integrated manner. The primary goal becomes sustainable development: i.e., to maximize the net benefits from existing resources (human, natural and produced capital), while maintaining the services and quality of these resources over time. Steps taken now at relatively low expense can reduce environmental problems and their adverse social impact, and provide a sound basis for future development. MoiJlizing Foreign Exchange and Public Resources (xiv) The recent decline in oil revenues adversely affected the balance of payments and the Government's Budget. In the short term, the resource shortfalls have been overcome by tight restraint on budget spending and import demand, as well as special external assistance from IGGI members. However, the long-term loss of oil revenues reemphasizes the importance of mobilizing resources from the non-oil economy. For the balance of payments, this is reflected In the high priority now being given to non-oil exports. And, for the Budget, efforts are underway to boost non-oil revenues through better tax administration. These efforts need to be sustained and expanded in the years ahead. In addition, the Government will have to follow an appropriate external borrowing strategy to supplement the availability of development resources, while maintaining a manageable debt burden. (xv) Non-oil export development. The projected growth of non-oil exports will be supported by returns on the past heavy investment in primary commodities (e;g., palm oil and rubber), as well as the steady expansion of the minerals and metals sector. But, manufactured goods are expected to set the pace. Given the anticipated slowdown in the growth of the two largest manufacturing subsectors -- textiles and plywood -- most of the future growth is expected to derive from a much more diversified set of manufactured products than in the past. As Indonesia's share of the world market for these "other" products is small, it is possible for competitive manufacturers to expand output by capturing a larger share of the global market. In this sense, developments in the international economy are less crucial than domestic policies. In addition, sustained export growth will require substantial investment in new export capacity. Although much of the recent expansion in non-oil exports has come from existing capacity, underutilized due to the depressed levels of domestic demand, there are also encouraging signs that export-oriented investments are on the rise. This trend can be expected to continue, provided: (a) export incentives are maintained; (b) further rpogress is made on removing trade barriers and simplifying domestic regulations; (c) the financial sector is able to respond to the needs of exporters for credit and equity; (d) appropriate - xi - institutional support is developed to ease access to export markets; and (e) management of resource leases for industries such as plywood is improved to ensure a sustainable supply of raw material. Under these conditions, and given the projected trend in world prices, it should be possible to double non-oil export earnings by the mid-1990s. (xvi) Public resource izati . The capacity of the Government to support investment and economic growth over the medium term will depend on efforts to improve public resource mobilization. Recent tax reforms have helped to increase non-oil taxes from 6.3% of GDP in 1983/84 to 8.6% in 1987/88. However, the non-oil tax effort is still significantly b- ow those in comparable Asian countries. With continued progress in improving t~.4. administration, it should be possible to increase non-oil tax revenues to 12% of GDP by the mid- 1990s. There may also be a need to consider selective increases in the tax base and rates over the medium term, especially if there is a further long-term decline in oil prices. These measures to increase non-oil tax revenues should be complemented by a broader effort to improve the finances of public enterprises and achieve greater cost recovery from public services. Greater cost recovery will not only induce more efficient use, but will also improve the quality of service, by helping to finance better O&N practices. To facilitate public acceptance and compliance, it is important that cost recovery be associated with improved services, that account be taken of other fees already paid by beneficiaries, and th.at provision be made to protect poorer groups in society. (xvii) External borrowing strategX. The macro-projections presented in Chapter 2 are predicated on the assumption that Indonesia will continue with its adjustment program, to reduce further the current account deficit. Even so, once allowance is made for higher amortization payments and the need to maintain adequate reserves, the annual financing requirement is projected to average US$7.8 billion p.a. in 1988/89 and 1989/90, 30% larger than over the past three years. For the immediate future, given the limited scope for starting new investment projects, the Government will have to continue to restrict new commitments of import-related credits. Although untied commercial credits provide the Government with more flexibility, their terms make them less attractive than program assistance from official sources. Furthermore, access to commercial markets cannot be taken for granted, especially at a time when banks are consolidating and reducing their exposure in developing countries. Far these reasons it is essential that IGGI assistance continue to provide the major share of Indonesia's external financing requirements. This assistance will also provide an important signal to world financial markets that the IGGI members support the Government's adjustment measures and have confidence in Indonesia's economic prospects. It is therefore recommended that the level of IGGI assistance to Indonesia in 1988/89 be US$3.6 billion, 13% higher than pledged for last year. (xviii) The current circumstances in Indonesia warrant special assistance -- in the form of untied and concessional fast-disbursing aid -- to support the adjustment in the balance of payments and the Budget to lower oil prices and adverse exchange rate changes. The response to this need has been very - xii - encouraging, with disbursements of special assistance totalling about US$1.4 billion during 1987/88. The balance of payments projections presented in Chapter 2 indicate that continued special assistance, at a level of US$2.4 billion, will be required for 1988/89. Program aid and local-cost financing both provide free foreign exchange for the balance of payments and the Budget during the adjustment period. For the Budget, program aid has the added advantage that it can be used flexibly to finance all expenditures related to project implemontation (e.g., land acquisition) and project effectiveness (e.g., O&H and tertiary canals for an irrigation system). Without this support, import and investment levels would have to be further restrained, thereby undermining economic growth, the non-oil export effort and medium-term development prospects. At the same time, the provision of special assistance has to be seen as a temporary expedient, matched by the Government's efforts to improve non-oil export performance and public resource mobilization. As the external and domestic gaps are narrowed, special assistance can and should be phased out. During the 1990s, there will be greater scope for commercial borrowing, while the role of external assistance will again focus on financing development projects, in both the public and private sectors. (xix) With continued progress on adjustment and an appropriate borrowing strategy, Indonesia is in a good position to reduce the burden of external debt, while also mobilizing adequate resources to support economic recovery and development. The growth of Indonesia's external debt is projected to slow considerably over the next few years, with virtually all of the increment being in the form of official assistance. Total MLT debt disbursed and outstanding is projected to rise from US$47.3 billion in 1987 to US$53.2 billion in 1990, an increase of only 12%. Debt service payments will rise more rapidly, by an estimated 33%, over this period. But, with the projected growth in non-oil exports, the debt service ratio will peak at close to 408 in 1988 and then decline back to 35% by 1990 and 22% by 1995. The Government remains committed to repay its external debts on schedule, as reiterated in the President's Speech of Accountability in March 1988. Provided the Government can mobilize the projected levels of external financing, especially the short-term requirements for concessional untied assistance, Indonesia's balance of payments position is expected to remain manageable and to strengthen over the medium term. Policies for Structural Chant. (xx) During the early 1980s, Indonesia's trade regime became increasingly oriented toward protecting producers for the domestic market. This was achieved through a proliferation of non-tariff barriers (NTBs), primarily in the form of import licensing restrictions. Enterprise performance was also affected by a multitude of restrictive domestic regulations, which stifled competition and impeded both foreign and domestic private investment. As oil- related earnings declined, the danger of pursuing an inward-looking development strategy became apparent. Sluggish domestic demand undermined profitability, while protection from foreign and local competition undermined efficiency. The resulting uhigh-cost economy" was not geared toward generating the expansion of v xiii - non-oil exports needed to replace oJl earnings or providing the necessary employment opportunities. A fundamental change in the incentive and regulatory framework was required to open up the economy to world markets and sustain domestic growth. The Government has responded to this need by implementing a far-reaching program of trade and industrial policy reforms over the past three years. This reform process needs to be sustained and complemented by efforts to develop the financial sector. (xxi) Trade policy reforms. The first steps toward improving the trade regime were taken during 1985 and early 1986, including: (a) a comprehensive reform of the tariff schedule in March 1985; (b) reorganization of customs, ports and shipping operations in April 1985; and (c) a package of measures to provide internationally-priced inputs to exporters, announced on May 6, 1986. These steps were followed by more fundamental trade reforms that have focussed on reducing the role of import licensing restrictions and moving toward tariff- only protection. Since October 1986, 539 items have been removed from license control, accounting for 31% of all items and 41% of total import value previously restricted. More importantly, the share of manufacturing production protected by NTBs has been reduced from 49% in mid-1986 to below 35% at end- 1987. This reduction in import licensing has been concentrated on those items with the highest effective rates of protection (e.g., textiles, iron and steel, and engineering goods). In some cases, higher tariffs or surcharges have been imposed to compensate for the removal of license restrictions, within the reduced tariff ceilings set in 1985. In other cases, tariffs have been lowered, primarily to reduce the cost of imported inputs not produced domestically. Finally, the December package has removed a number of export restrictions: the need to obtain a special export license was abolished, several export bans and quotas have been removed, and access by exporters to the May 6 scheme has been broadened. These measures will reduce the anti-export bias of the trade regime, thereby increasing the relative profitability of exports and bolstering the export drive. (xxii) In order to benefit fully from these trade reform measures, the Government needs to ensure that they are iwplemented properly. Where licenses are still required, it is important that the Ministries of Industry and Trade continue to search for ways to simplify license application procedures and to strengthen their monitoring capacity to assess how efficiently the current system is operating. The criteria by which surcharges are imposed, as well as their time limit, also need to be clearly defined. At the same time, the process of trade reform needs to be extended by: (a) simplifying the range and definition of license categories; (b) limiting the coverage of import/export bans and quotas; and (c) continuing to reduce the number of items subject to restrictive licenses. The strategy of moving away from NTBs inevitably increases the importance of the import tariff structure. While recent ad hoc tariff changes have been justified by the removal of licensing restrictions, domestic producers need to be given a clear signal that both the level and variance of tariff protection will be reduced over the medium term. An important next step, therefore, is to formulate a comprehensive plan for tariff rationalization. (xxiii) Enternrise deregulation. The Governaent has taken a series of steps to simplify and relax the regulatory framework over the past three years. A start was made in 1985 when the investment process was streamlined. In 1986, the number of areas open to private foreign and domestic investment was expanded substantially, foreign investment companies were given greater access to domestic capital and financial institutions, and domestic ownership requirements were eased. The Government's drive to revitalize the private sector and encourage foreign investment gained momentum during 1987: (a) As a result of measures taken in June, inestment and capacitv licensngU restrictions were eased. Firms are now allowed to increase production by up to 30% of their licensed capacity without requiring new investment .pproval. More significantly, firms hive been permitted to divwrsify production within much broader production categories, chereby improving their operational flexibility and promoting greater competition. The requirements for investment licenses wera also streamlined and additional fields of investment opevnd to private domestic and foreign investors. (b) The December package included a series of measures to relax Zoreign investment egulations: domestic ownership requirements were eased significantly; restrictions prohibiting joint-venture companies from marketing Indonesian export goods were removed; foreign firms are now allowed to purchase domestic inputs without restriction; and rules regarding the hiring of expatriate personnel were relaxed. Together with the broader regulatory reforms, these measures have improved substantially the climate for foreign investment in Indonesia. (c) In February 1987, the local content roprams for commercial vehicles, motorcycles and tractors were modified to extend the timetables to 1990 and to allow "multi-sourcing" of all spare parts and components. The December package also removed many of the sole agency restrictions (e.g., on most consumer electronics and machine tools), which protected domestic assemblers from import competition. (xxiv) Yet, despite this progress, the regulatory framework in Indonesia is still complex and confusing, especially to potential new investors. Follow- up action is therefore required to simplify further regulations and to reduce the scope of industrial licensing. A first stop is to ensure that the ubroad- banding' measures introduced in 1987 are implemented well. The deregulation drive can be extended by: (a) opening additional areas to domestic and foreign private investment; and (b) streamlining and making license approval and other procedures more automatic. To attract foreign investment, the authorities could strengthen promotional activities further, highlighting the deregulation measures already taken, and ensuring that eligible foreign investments are speedily and consistently approved. In addition, the recent changes in ownership requirements should be modified, to avoid discrimination against - xv. established companies. For the local content programs. the recent trend towards tariff-only protection for domestic assemblers should continue. Concurrent with changes in the trade regime, deletion timetables could be further lengthened, to allow more time for the development of local component manufacturors, before tariff penalties are imposed. (xxv) Financi-l sector devlopment. The ability of business enterprises to respond to the ongoing program of trade and industrial policy reform, and to support the non-oil export drive, will depend critically upon supportive financial sector policies. While recent financial sector reforms have led to rapid deposit growth, they have been less successful in improving the availability and cost of long-term investment funds. This is especially important for the small-scale and export sectors, where the absence of established track records in production and marketing often constrains access to institutional credit. In addition, while there are signs of some recovery in corporate profitability, the sector is undergoing financial distress as a result of cost pressures and the adverse domestic market conditions over the past few years. The ability of manufacturing firms to grow in the future, iherefore, will rest not only on physical restructuring to reorient production toward export markets, but also on financial restructuring to generate sufficient funds to undertake the required investment. In turn, the ability of the financial sector to meet these funding needs will be determined by actions to improve the efficiency of the banking system and develop capital markets. The longer-term objective should be the creation of an efficient financial market to provide potentially profitable enterprises access to required risk and debt capital, supported by strong accounting, information and audit systems. (xxvi) Careful consideration needs to be given to the formulation of a strategy for restructuring potentially viable enterprises facing financial difficulties. Financial institutions will have to play an active role in rescheduling loan terms and providing new assistance. As liquidity problems are often symptomatic of basic problems in an enterprise's business strategy, competitive position and management capabilities, financial restructuring needs to be coupled with more fundamental rehabilitation measures. However, this process will increase the vulnerability of banks to the fortunes of restructuring firms. To protect bank viability, it is therefore important to give banks the operational freedom to assess loan risks and to choose which firms to finance. In addition, it would be necessary to: (a) enhance the capability of banks to make appraisals of projects; (b) strengthen the capital base of state banks by injecting government equity; and (c) review banking regulations to induce banks to increase their reserves and loan risk provisions to realistic levels. Financial restructuring will help in improving the competitiveness and flexibility of banks, but other measures will also be needed to increase the capacity of the financial system to supply investment funds at reasonable cost. In the first instance, this will require a continuation of ongoing efforts to reduce the intermediation costs of banks, through managerial and technical initiatives at the level of individual institutions. Policy actions with regard to the operating environment, specifically to increase competition for deposits and credit, would also assist in lowering spreads. Over the longer term, the capital market will be able to take a more active role - xvi - in providing investment funds. Some initiatives to strengthen the capital market were announced in December 1987. These initiatives now need to be mplemented and developed into a capital market strategy, including additional steps to attract funds from overseas. Environment and Natural Resource Management (xxvii) Economic activity in Indonesia is closely linked to the country's vast and diverse base of natural resources. In addition to being a major exporter of crude oil and natural gas derivatives, the country enjoys substantial reserves of coal, tin, nickel and other minerals. The world's richest commercial forest is located here, as well as very diverse fishery resources. Although agricultural diversity is also substantial, rice and tree crops dominate production, benefitting greatly from the abundant rainfall and fertile soils in many areas of the country. Together, the primary producing sectors (agriculture, forestry, fishing and mining) account for about 45% of value added, 85% of export earnings and 55% of employment in Indonesia. The inclusion of further stages of downstream processing would raise these proportions considerably. In addition, there is increasing recognition of the environmental services provided by natural resources. For example, the protective role of Indonesia's forests -- in preserving biological species and preventing soil erosion -- represents a significant economic contribution, even though it is not directly measurable. (Xxviii). Despite severe manpower and financial constraints, Indonesia has had a longstanding commitment to the basic concepts of sustainable development and environmental protection. The appointment of the State Minister for Population and the Environment (KI) in 1983 provided an institutional focus for coordinating environmental efforts and all government agencies have been instructed to develop mechanisms for implementing environmental laws and regulations. The importance of environmental concerns in Indonesian development policy has also been reiterated in the Guidelines of State Policy for REPELITA V. In addition, many of the policies being pursued by the Government for efficient economic growth and reduced population growth will have favorable impacts on the environment and natural resource management. Recent pesticide measures provide an example. Until 1986, heavy subsidies had encouraged the over-use of pesticides, many of which had detrimental effects on ecological balances, including the destruction of natural predators. As a result, the brown planthopper (BHP) became an extremely destructive pest. Once these problems were recognized, the Government introduced a new, sustainable strategy of crop protection, Integrated Pest Management (IPM). The President issued instructions banning 57 different pesticides for rice, and recommending the use of a few narrow spetrum insecticides'instead. Steps have subsequently been taken to strengthen crop protection field staff, develop IPM crop technology packages for rice and other crops, and reduce pesticide subsidies. These measures have been dramatically successful. Damage by the BPH declined sharply and the most productive rice varieties can now be grown again, increasing production and farmer incomes. - xvii - (xxix) For a country of Indonesia's vast size, diversity of natural resources, large population and impressive economic growth record, there are obviously a number of emerging issues related to the environment and natural resource management. However, tackling these issues is not costless. As the availability of budgetary resources and technical manpower will be constrained for the foreseeable future, issues that are most critical in terms of their contribution to employment, output and incomes will have to be tackled first. Three important issues considered below are: (a) forestry management and land use in the Outer Islands; (b) water quantity and quality management in Java; and (c) pollution issues related to the industry and energy sectors. (xxx) Indonesia's forest resources cover an estimated 114 million ha., or 60% of the total land area. Increasing demands for land in the Outer Islands have led to progressive encroachment on forest lands and the conversion of unsuitable lands to agriculture. Deforestation -- due to smallholder conversion, development projects, poor logging practices and disasters -- is estimated to occur at a rate of nearly 900,000 ha. per year. An additional 3 million ha. was lost in 1983 due to the Kalimantan fire. These problems can be ameliorated through: (a) an expanded conservation effort (with donor support); (b) better forestry and land management planning; (c) incentives to encourage perennial crop production; and (d) crop intensification schemes, to reduce the need for large-scale projects in forested areas. Logging and wood processing practices could be improved by providing longer tenure to concessionaires, enforcing regulations and improving mechanisms for revenue collection. The Government is also reducing pressures on natural forests by promoting forest plantation development. (xxxi) Although Java is well endowed with water resources, there are already seasonal water shortages, and the water supply/demand balance in several river basins is becoming critical. In addition, pollution in the downstream areas of all the north coast rivers has seriously reduced the amount of raw water that can be used for municipal and industrial purposes. The relative neglect of upper watershed agriculture is an important cause of downstream problems with river regimes. Not only would agricultural intensification raise incomes in the upper watersheds, they would also mitigate some of the soil erosion problems that occur. However, policies requiring changes in land use management by the numerous upland farmers will only show results after the elapse of several cropping seasons. Therefore, construction of additional dams and storage facilities, especially in areas prone to floods and water shortages, may also be necessary. Given the large investments involved, careful evaluation of costs and benefits is a critical input for decisions in this area. More generally, the Government is taking steps to improve the institutional mechanisms for water management. However, these will have to be extended, especially at the provincial level, to overcome remaining problems arising from the fragmentation of existing agency mandates. Higher cost recovery on water use, especially for irrigation purposes, would reduce waste and provide additional resources for 06& expenditures. (xxxLi) The water and air Rollution problems stemming from the industry and energy sector are expected to intensify as these sectors grow more rapidly in the years ahead. For the industrial sector, the legal framework of an - xviii - onvironmental control program is basically in place. However, without an offective monitoring program and adequate data, enforcement of existing laws is proving to be extremely difficult. A strategy to deal with industrial pollution issues would need to: (a) establish pollution monitoring and control agencies, preferably under the provincial governors; (b) enact air and water standards for industrial discharges and solid waste disposal; (c) ensure that future industrial investments are in Initial compliance with environmental regulations; and (d) compile an information base on the extent and nature of industrial pollution. In the energy sector, several options exist for the efficient substitution of energy sources: from fuel oil-based power generation to low- sulphur coal, hydropower and gas; from diesel-based power generation in industries and rural areas to grid-supplied electricity; and from fuel oil and kerosene-based gas to natural gas in urban gas distribution networks. These substitutions are expected to have a generally favorable effect on pollution levels. It would also be important to formulate environmental standards and policies for major energy projects. These policies should address issues of siting, design and operation, including allowable discharge of specific pollutants and proper handling of waste materials. (xxxiii) This review of critical environmental issues provides some broader conclusions on the future direction of environmental efforts in Indonesia. Most of these relate to institutional and human resource development: (a) Despite the dominance of particular issues in specific geographical areas, the effects are seldom confined to a single habitat or environmental medium. Therefore, the appropriate approach to environmental issues requires multidisciplinary analysis and close coordination among the agencies responsible for implementing policies. (b) Most environmental issues arise from the cumulative effects of many small agricultural, mining and industrial activities. Consequently, environmental management requires broader participation than is presently the case and greater decentralization of decision making and financial responsibility. (c) A broad range of instruments is required to handle the environmental effects of numerous economic activities and those resulting from identifiable point-sources. Government regulations, general incentive policies (e.g., prices, subsidies and tariffs) and project location policies all need to be deployed to achieve satisfactory outcomes. (d) While attempts to formulate environmental guidelines based on realistic standards should continue, greater emphasis should be placed on improving the institutional capacity for monitoring and implementation. This will have to be done by line-Ministries and provincial agencies, and steps should be taken to strengthen them accordingly. -xx - (e) Environmental management will also require resources for physical lnvestments (e.g., in vaste collection and treatment facilities) and manpower training. Clearly, given the Government' a budgetary constraints, this implies a firm commitment from the external donor community and a larger degree of private sector participation. The donor community can support thls process through projects and technical assistance, especially on grant terms. Early involvement ls feasible in forest conservation and urban sanitation programs. Each donor-asslsted project shouid be subject to envlronmental screenlng, and annual consultations with the Government should include reporting on environmental issues. lublic Soendins Priorities (xxxiv) Progress on public resource mobilization will have to be matched by a careful review of public expenditure priorities. In this regard, particular attention has to be given to officient operatlon and maintenance (061) of public infrastructure. Otherwlse, the productlvity of thls infrastructure and the quality of public services would decline. Over the past year, the Government has made signlficant progress in this area, by providing additional budgetary resources for 061M and developing O& strategies ln selected sectors (e.g., irrlgation, urban infrastructure, rural roads). However, the large magnitude and complexity of the 06tl problem warrants a continuous effort over an extended period of time. Future initiatives should provide for: (a) substantially larger allocatlons of budgetary resources for O6K; (b) the deslgn and implementation of sectoral 0611 strategies; (c) strengthening the budgetary system for 061; (d) improving instltutional coordination; and (e) introducing 061 considerations into the planning process. Donors can also help by funding 0611 on a temporary basis, while developing sector capacity for implementation and cost recovery. (xxxv) Over the past four years, the decline in oil prices has forced the Government to reduce public iLvestment levels and rephase large capital- intensive projects. The largest cutbacks have occurred in sectors where private sector optlons can be developed (e.g., industry and mining) or where implementation constraints are severe (e.g., transmigration). Given the projected tightness of budgetary resources and the priority for 011, the emphasis on consolidation is likely to continue for the next two years. During this period, continued priority should be given to completing ongoing projects. However, over the medium term, as additional resources become available, the public investment effort will need to expand to support IndonesiaLs development objectives and priorities. As noted above, these include: (a) generating employment and incomes; (b) promoting non-oil exports; (c) developing human resources; and (d) improving environmental managemernt. The recent focus of development spending on agricultural development, electricity and transport infrastructure, and human resource development programs is clearly consistent - xx - with these objectives. However, in all areas, the Government intends to review its role in investment activity, bearing in mind the potential contribution of the private sector and the scope for improving project implementation capacity. (xxxvi) The objectives of promotine non-oil eXggrts. emlo9ment snd ings are closely interlinked. The public investment program can contribute to these objectives in three ways: (a) by investing In export-based and labor- intensive production activities; (b) by developing essential infrastructure to support these activities; and (c) by financing special employment creation programs. Given the strength and capacity of the private sector in direct production activities (especially in agriculture and manufacturing), the role of the public sector will be to create incentives, through appropriate macroeconomic policies and structural reforms, which will allow the private sector to expand output and exports, thereby supporting employment and incomes. The main role of public investment in promoting these objectives will be 'ndirect, through infrastructure development. There will be a substantial need to enhance the availability and efficiency of transport, electricity, water and waste disposal facilities in order to support the expansion of non-oil exports, especially from the manufacturing sector. (xxxvii) The Government's continued emphasis on the development of human resources is well placed, as a productive labor force is essential to realize Indonesia's long-term growth potential. The past public investment effort focussed on expansion of facilities for education, health, family planning, water supply and sanitation. This effort has paid off, as reflected in large improvements in literacy rates and health standards, as well as lower fertility rates. But there are growing concerns about the poor quality of many essential services. In the 1990s, the main emphasis will need to be on quality improvements, with selective expansion. For example, the key to improving the quality of the labor force is enhanced quality of schooling, starting at the primary level. A strong effort is needed to improve the quality and motivation of teachers. Improvements in the quality of education will also require actions to interpret curricula to stress science and math, to augment the production and distribution of high quality textbooks, and to increase the availability of recurrent funding for schools. As in general education, there is a need to emphasize the quality of vocational training. Over the longer term, the private sector should play a significantly larger role in providing and bearing the cost of high quality training. The Government can assist this process by improving labor market information about employment and training, including costs and benefits of different training schemes. In the short to medium term, it will also be necessary to ensure better utilization and improved efficiency of the existing government training facilities. It is essential to link the use of these facilities with actual employment by entering into cost-sharing arrangements with employers. (xxxviii) The investment strategy for the 1990s will need to make a special effort to take account of environmental gonsiderations in determining investment allocations. As reviewed above, a broad-based action program will be needed to - xxi - address the major environmental concerns adequately. Although there are important implications for public investment, most of these measures relate to pricing policies, improved planning and strengthening of institutions. In general, the public investment strategy would need to focus on: (a) ensuring that envlronmental and natural resource management concerns are reflected in the selection and design of projects; (b) ensuring that all new projects satisfy *stablished environmental regulations; (c) supporting the development of environment monitoring capacity in relevant agencies; and (d) supporting the expansion of information and research on environmental issues. (xix) The Government has made considerable progress over the past two years in improving 2roiect implementation. This is reflected in improved disbursement performance for all of the major donors (e.g., the World Bank, ADB, OECF). These efforts need to be sustained and intensified in the years ahead. Remaining issues include: (a) bidding practices need to be streamlined to avoid procurement delays; (b) land acquisition needs to start earlier in the project cycle, vith careful monitoring of equity considerations; (c) land mapping and programs require extensive improvement; (d) agencies need to focus more on multi-year project budgeting and financing; and (e) local consulting services should be improved. To ensure that the quality and pace of implementation meets development goals, greater attention needs to be paid at the various management levels to monitoring the progress of projets. Finally, an efficient construction industry is essential to support Indonesia's overall development effort, but especially to improve project implementation capacity in the public sector. The Government recognizes this priority and is preparing an action program to strengthen financial, technical and organizational aspects of the construction industry. CHAiPTEI PROGRESS QN ECONOMIC ADJUSTMENT A. ILcoductiln 1.01 The Indonesian economy grew rapidly during the 1970s, buoyed by higher oil prices and public investment. However, since the early 1980s, the external environment faced by Indonesia has worsened considerably. Over the past five years, real oil prices (adjusted for rising import costs) have fallen by more than 50%, with most of the decline occurring since early 1986. At the same time, the burden of Indonesia's external debt has been sharply increased by the depreciation of the US Dollar since mid-1985. Without the appropriate policy response, these factors could have easily combined to undermine Indonesia's balance of payments position. Fortunately, the Government was equal to the challenge, taking decisive action to restrain domestic demand, mobilize additional resources and set in train the structural changes needed to develop the non-oil economy. This strong growth-oriented adjustment effort has succeeded in reducing external and domestic imbalances, while also sustaining a better-than-expected rate of economic growth. For the immediate future, the adverse external environment is likely to persist, necessitating continued prudence in fiscal policies and external debt management. However, provided the Government sustains progress on its policy agenda, and receives appropriate support from the international community, there are encouraging signs that the Indonesian economy will emerge from its recent difficulties in a stronger position to restore growth and d&velopment momentum over the medium term. 1.02 This chapter focusses on the key elements of the Government's adjustment program (Section B) and their impact on the performance of the economy (Section C). Particular attention is given to the iFplications for the employment situation (Section D). Subsequent chapters of the repo=t then look at the development issues and policy prioritles that are likely to shape the prospects for growth and sustainable development over the medium term. A more detailed assessment of economic developments over the past year is provided in Annex 1. B. The Government's Adjustment Program 1.03 The Government's adjustmert program was initiated in 1983 and has been intensified since the collapse of oil prices in 1986. There are four key elements. First, the Government has established a very successful record of sound macroeconomic management, based on nrudent fiscal and monetary nDlicies. A key element in this has been cuts in public investment. A major rephasing of large capital-intensive projects was initiated in May 1983 and public -.ending has been restrained in subsequent years. In response to the collapse of oil prices in early 1986, very austere Budgets were implemented in 1986/87 and 1987/88; real capital spending has been cut back sharply and no provision has been made for increases in civil service salaries over these two years. As a result, there has been very little scope for startinZ new projects and many locally-funded projects have been curtailed. Steps have also been taken to contain investment by public enterprises. Tight control has been kept on the utilization of non-concessional import-related credits since 1984/85 and equity participation in public enterprises funded through the Budget has been reduced to minimal levels. Because of these measures, it is estimated that total public investment haa fallen by about one quarter in real terms since 1982/83. 1.04 Second, the objectives of demand restraint and structural change have both been served by appropriate exchange rate management. The Rupiah was devalued by 28% (IMF definition) in March 1983 and the exchange rate was subsequently managed more actively. As domestic inflation was brought under control, the real effective exchange rate remained relatively stable over the next two years and the Rupiah was allowed to depreciate (with the US Dollar) from mid-1985. However, faced with a sharp fall in oil prices and uncertain prospects for the medium term, the Government devalued the Rupiah by another 31% in September 1986. Subsequently, the value of the Rupiah has been allowed to drift down with the US Dollar, wile diomeatic inflation has been controlled through appropriate monetary and fiscal policies. As a result, Indonesia has maintained a competitive exchange rate and provided strong incentives for non- oil export development- 1.05 Third, to help ease the Government's budgetary position and restore domestic balance, domestic rgesource mobilization has been strengthened through financial sector and taxation reforms. The mid-1983 reforms in the financial sector removed most interest rate controls on state banks and credit ceilings for all banks. In response to the subsequent increase in interest rates, time and savings deposits have tripled over the past four years. Tax reforms introduced in 1984-86 have gone a long way toward broadening the tax base, improving the buoyancy of tax revenues, simplifying the tax system and strengthening tax administration. The reforms have already had a very positive impact on non-oil tax revenues, which rose from 6.3% of GDP in 1983/84 to an estimated 8.6% in 1987/88.Z1 1.06 Finally, the Government has made substantial progress over the past three years to improve the trade and industrial goli=y regime. In the area of trade policy, some initial steps were taken in 1985 and early 1986, when the Government implemented a tariff reform, reorganized the customs, ports and shipping operations, and introduced a package of measures to provide internationally-priced inputs to exporters. These steps were followed by more LI Including taxes collected by local governments. - 3 - fundamental trade reforms that have focussed on reducing the role of import licensing restrictions and moving toward tarlff-only protection. Since October 1986, license controls have been removed on 40% of the import value previously restricted. More importantly, the proportion of manufacturing production protected by import licensing restrictions has been reduced by almost 30%. Progress in the area of domestic licensing has also been noteworthy. More sectors have been opened for foreign and domestic private investment, licensing requirements for establishing and operating firms have been reduced, and licensing procedures have been simplified. These measures are all aimed at developing a more competitive and efficient manufacturing sector, that can contribute to employment generation and non-oil export development over the medium term. C. Impact gn Economic Performance The First Adjustment Period: 1982-85 1.07 During the 1982-85 period, Indonesia had to adjust to the steady weakening of the oil market, the onset of a worldwide recession and the decline in the prices of several important primary exports (e.g., rubber, palm oil and tin). By 1982/83, Indonesia's current account deficit had widened to US$7.2 billion (7.7% of GNP). In order to reduce this deficit to a manageable level, the Government devalued the Rupiah in March 1983 and cut back budget spending. These measures helped to restrain aggregate demand, especially for imports. The real level of non-oil imports declined on average by 11% p.a. over the next three years. There was also a positive response of non-oil exports, albeit from a small base, to the improved profitability provided by the devaluation (see Table 1.1). 1.08 These trends helped to reduce the current account deficit to US$1.9 billion (2.4% of GNP) by 1985/86. Domestic inflation was also brought under control. At the same time, these adjustments led to short-term costs in the form of slower growth of output and incomes, reduced levels of public and private investment, low rates of capacity utilization in some subsectors, and the emergence of financial problems among industrial enterprises. Problems in the manufacturing sector were compounded by high and variable levels of protection provided by a proliferation of import licensing restrictions. Nevertheless, prior to the unexpected collapse of oil prices in 1986, Indonesia seemed to have largely overcome its balance of payments and macroeconomic adjustment problems, and was set on a path that potentially would have sustained strong economic growth over the medium term. - 4 - Table I. 1: RECENT ECONOMIC DEVEWPMENTS .L Actuals _ Estimate 1978-82 1982-85 1986 1987 Real growth rates (% p.a.) GDP 5.3 3.8 3.6 3.7 Non-oil GDP 6.9 4.0 3.8 4.3 - Agriculture 5.0 3.7 2.5 2.3 - Mining 9.2 6.5 4.0 3.1 - Manufacturing 9.3 4.4 6.3 6.9 - Construction 11.0 0.7 2.2 5.6 - Other services 9.3 4.6 4.3 4.9 National income .. 2.2 -2.5 4.2 Private consumption .. 2.8 3.1 3.6 Fixed investment 13.5 -4.4 -7.0 0.6 - Public .. -3.2 -15.6 -3.9 - Private .. -5.8 3.1 5.0 Non-oil exports 10.5 17.1 2.8 24.2 Non-oil imports 13.8 -10.7 -12.4 0.8 Ratios (%) & Budget balance/GDP -4.1 -2.9 -4.6 -2.7 Current account/GNP -7.7 -2.4 -6.2 -3.1 Debt service/exports 16.4 25.4 36.8 34.7 Fixed investment/GDP 25.9 20.8 20.5 19.7 Prices Oil price (US$/bbl) A 32.9 25.0 12.5 17.0 Terms of trade (1983/84-100) A 109.3 93.3 62.6 69.2 Domestic inflation (% p.a.) 13.9 8.4 9.1 9.3 /A Balance of payments data are for fiscal years (starting April 1). Other indicators are for calendar years. Ab For last year of multi-year periods. Source: Central Bureau of Statistics and World Bank staff estimates. 5- The Second Adjustment Period: 1986-87 1.09 Crude oil prices fell from US$28/barrel in January 1986 to below US$10/barrel in August 1986. Although subsequently there has been some recovery, average oil prices for 1987/88 are estimated to have been only about two thirds of their 1985/86 level. As a result, net oil/LNG earnings fell by US$2 billion over these two years. At the same time, Indonesia's external debt payments rose by about US$2 billion. As shown in Table 1.2, at least US$1.5 billion of this increase is due to exchange rate changes. The combined impact of lower oil prices and exchange rate changes accounts for all of the increase in the public debt service ratio since 1985. The total debt service tatio rose sharply from 25% in 1985 to 37% in 1986. Because of the strong performance of exports, this ratio is estimated to have declined somewhat to 35% In 1987. 1.10 Indonesia was well placed to handle these severe shocks because of the series of adjustment measures taken by the Government since 1983. These efforts have been intensified over the past two years. Although the Government e resource position turned out to be better than budgeted in 1987/88, due to higher oil prices and the provision of special external assistance, expenditures Table 12: IMPACT OF EXTERNAL SHOCKS ON INDONESIA'S PUBLIC DEBT PAYMENTS, 1985-87 1985 1986 1987 External shocks ig Exchange rates (Yen per US$) 238.5 168.5 144.6 Oil prices (US$/barrel) 25.0 12.5 17.0 Public debt RarmeiLt (US$ billion) b At current exchange rates 3.6 4.4 5.4 At 1985 exchange rates 3.6 3.7 3.9 Exports of goods & services (US$ billion) At current oil prices 19.9 15.2 19.4 At 1985 oil prices 19.9 21.1 23.6 Public debt service ratio (a) At current exchange rates & oil prices 18.1 28.9 27.8 At 1985 exchange rates & oil prices 18.1 17.5 16.5 La Annual averages. & Excluding debt service on LPG/LNG expansion credits and prepayments. Source: World Bank staff estimates. -6- remained tightly restrained (see Table 1.3). Since 1985/86, there has been no increase in civil service salaries and real capital spending hac been reduced by 25%. As a result, the overall budget deficit was reduced to 2.7% of GDP in 1987/88. Net domestic expenditure is estimated at 4.0% of GDP in 1987/88, slightly lower than in the previous year and substantially below the 8-12% recorded in the early 1980s. As regards monetary policy, the growth of rupiah liquidity slowed from 33% in 1985 an average of 22% p.a. over the past two years. Following a speculative outflow of private capital in May and early June 1987, the authorities took a number of effective monetary measures to reduce rupiah liquidity and push up domestic interest rates. These measures helped to attract back funds held overseas, and the level of private capital flows has subsequently returned to normal levels. Interbank interest rates declined rapidly thereafter and, with the gradual easing of the liquidity position of comercial banks, reductions in both deposit and (to a smaller extent) lending rates have also occurred. Even so, the real level of unsubsidized lending rates (7-25%) is still very high. 1.11 This cautious approach to fiscal and monetary policy, together with the initial cost-raising reflects of the September 1986 devaluation, have helped to restrain import demand. Although there has been a recovery over the past year, the real level of non oil imports is still 12% lower than in 1985/86. More importantly, domestic inflation has been held to about 9% p.a., thus preserving the competitive advantage provided by the devaluation and improving the profitability of export activities. Recent trade and industrial policy reforms have further improved the environment for non-oil export development. In response, non-oil export earnings are estimated to have soared to US$9.4 billion in 1987/88, an increase of close to 40% in nominal terms and about 24% in real terms over 1986/87. About two thirds of this increment is contributed by manufactured goods, despite the slower growth of textiles (which accounted for a third of manufactured exports in 1986/87). Exports of "other' manufactured goods more than doubled in value, from US$0.7 billion in 1986/87 to almost US$1.5 billion in 1987/88, representing a real growth rate of about 74% . Furthermore, this growth has been achieved across a wide range of products (e.g., paper products, furniture, shoes, batteries), some of which were exported for the first time. 1.12 Because of the strong non-oil export performance and demand restraint on inputs, the Government succeeded in containing the current account deficit to US$4.2 billion (6.2% of GNP) in 1986/87 and reducing it to an estimated US$2.0 billion (3.1% of GNP) in 1987/88 (see Table 1.4). The financing of these deficits and higher amortization payments has been eased considerably by the provision of special external assistance, in the form of fast-disbursing program aid and local-cost financing. Disbursements of special assistance totalled about US$0.5 billion in 1986/87 and US$1.4 billion in 1987/88. This is a significant amount in the overall balance of payments, financing 12% of total non-oil imports over the past year. As such, special assistance has played a very valuable role in helping the Government push ahead with its trade deregulation measures and in facilitating the recovery of private investment and growth. By the end of 1987/88, Bank Indonesia was able to rebuild its net - 7 - Table 1.3: CENTRAL GOVERNMENT BUDGET, 1982/83-1987/88 (Rp. trillion at current prices) Actuals Budget Estimate 1982/83 1985/86 1986/87 1987/88 1987/88 Revenues and grants I15IL 17L. 21.7 Oil and LNG taxes 7.6 10.7 6.3 6.9 10.1 Non-oil taxes 3.8 6.3 7.9 9.1 9.5 Non-tax revenues Ja 0.4 1.5 2.2 1.2 1.8 Grants 0.1 0.1 0.1 0.1 0.3 Current exenditures k 8. 1. 1 External interest 0.7 1.8 2.8 3.4 3.8 Subsidies 1.4 1.1 0.5 0.2 1.2 Other 6.1 9.5 9.9 9.4 10.2 Government savings 3.7 .I. 4.3 6.5 Canital exoenditure 6.4 Q 80 6 9.7 Overall balance -.7 -.8 -4.7 -2.0 -3.2 Financed by: External loans (net) Li 1.8 2 Disbursements 2.8 4.4 7.1 5.4 8.0 - Project aid (2.0) (3.5) (4.1) (4.4) (5.3) - Other / (0.8) (0.9) (3.0) (1.0) (2.7) Amortization 0.7 2.6 3.3 3.4 4.9 Asset drawdown 14 QL 0. 0. 00. Remo itma (% of GDP): Revenue and grants 18.3 19.6 16.2 14.7 18.5 Non-oil taxes 5.9 6.6 7.8 7.8 8.1 Government savings 5.7 6.6 3.2 3.7 5.6 Overall balance -4.1 -2.9 -4.6 -1.7 -2.7 Total expenditure 22.4 22.5 20.8 16.5 21.2 Net domestic expenditurea 11.0 8.3 4.1 1.0 4.0 ja Inrludes domestic oil surplus in 1986/87. 1k Derived from routine expenditure by deducting amortization and adding the fertilizer subsidy, export certificates, defense spending and the recurrent component of development expenditure. 14 Refers to program loans, special local-cost financing and commercial borrowing. id Excludes gain from valuation adjustment in 1986/87, estimated at Rp. 1.8 trillion. 14 Defined as the domestic content of expenditure less non-oil revenues. Source: Ministry of Finance and World Bank staff estimates. -8- Table 1.4: BALANCE OF PAYMENTS, 1982/83-1987/88 (US$ billion at current prices) Actuals Estltar& 1982/83 1985/86 1986/87 1987/88 Merchandise exports (fob) 18.6 18.5 13.7 17.9 - Oil & LNG (14.7) (12.3) (7.0) (8.3) - Non-oil (3.9) (6.2) (6.7) (9.4) Merchandise imports (cif) -20.6 -14.2 -12.7 -14.1 - Oil & LNG (-4.8) (-3.2) (-2.3) (-2.5) - Non-oil (-15.8) (11.0) (-10.4) (-11.6) Trade balance -2.0 4.3 11 3. Net non-factor services -1.7 -1.7 -1.5 -1.5 Resource balance -3.7 2.6 .5 2. Net factor services & transfers -3.5 -4.5 -3.7 -4.3 Current account balance -7.1 -1.92 4 .. of which: -Oil & LNG L& 7.2 5.9 2.4 3.7 = Non-oil -14.4 -7.8 -6.6 -5.7 Net public MLT loans / 4.0 1.4 2.8 2.4 - Disbursements (5.1) (3.9) (5.4) (6.3) - Amortization La (-1.1) (-2.5) (-2.6) (-3.9) Net other capital i -0.1 1.4 -1.6 0.8 Use of net foreign assets 3.3 -0.9 3.0 -1.2 Nemo items: Net official reserves In 3.0 5.8 5.0 5.6 - Months of imports (1.7) (5.5) (4.3) (4.4) Total net foreign assets Lf 7.5 12.6 9.6 10.8 La Current account/GNP (%) -7.8 -2.4 -6.2 -3.1 La Gross earnings from oil/LNG exports less payments for imports and services related to the sector. 1k Includes credits for LNG expansion, LPG and paraxylene projects. La Includes prepayments of US$420 million in 1985/86 and US$626 million in 1987/88 (to be completed by June 1988). i_ Includes direct foreign investment, oil/LNG exports credits, all private capital flows, valuation adjustments, and errors and omisslons. La Net of outstanding drawings from IMF's Buffer Stock and Compensatory Financing Facilities. ig Of the banking system (Bank Indonesia and comercial banks). La Excludes US$326 million of prepayments to be completed by June 1988. Source: Bank Indonesia and World Bank staff estimates. -9- official reserves to US$5.6 billion, equivalent to 4.4 months of imports. This relatlvely high level of reserves is considered appropriate, given Indonesia's open capital account and the need to ride out occasional episodes of speculation. 1.13 Disbursements of project aid, primarily from the IGGI, rose to an estimated US$2.2 billion in 1987/88, 21% higher than in 1986/87 and 46% higher than in 1985/86. Disbursement levels have risen for all of the major donors (e.g., the World Bank, ADB, OECF). Part of this increase is due to exchange rate changes. However, there has also been a noticeable improvement in project implementation over the past two years. This positive trend reflects the high- level attention given to implementation problems by the Government of Indonesia. In July 1986, an interdepartmental committee for the monitoring and improvement of implementation was established under the chairmanship of the State Minister for Administrative Reform. Among the contributions of this committee was a drastic overhaul and simplification of procedures for the administration of foreign assistance, which became effective in March 1987. More recently, in March 1988, the Government announced the decentralization of procurement procedures for contracts valued up to Rp. 3 billion (larger contracts will be subject to the approval of the Coordinating Minister for Economic, Financial and Industrial Affairs). This change is intended to speed up and simplify procurement procedures, with supervision provided through post audits by the Government Audit Agency (BPKP). Other steps have been taken to improve land acquisition and budgeting procedures. An all-out effort will be required to sustain and improve implementation performance in the coming year (see Chapter 6). Attention will also have to be given to improving the capacity and efficiency of the local construction industry, to enable it to play a larger role in project implementation. But, the challenges ahead should not distract from what has already been achieved and the positive contribution that these efforts have made to Indonesia's development. 1.14 The Government's balanced adjustment program has also helped to sustain a better-than-expected rate of economic growth, despite the loss of oil revenues. Total GDP grew on average by 3.7% p.a. in 1986 and 1987. Most of this growth came from the non-oil economy. Within the non-oil economy, a decline in the growth rates of the agriculture and mining sectors was more than offset by improvements in the performance of the manufacturing, construction and service sectors. Overall performance was buoyed by the strong growth of non-oil exports, while restraining factors were the drought in 1987 and cuts in government spending. The combination of GDP growth and an improvement in Indonesia's terms of trade helped to support a real increase in national income of 4.2% in 1987, as compared to a decline of 2.5% in 1986. There were also encouraging signs of a recovery in private investment, by both domestic and foreign joint-venture investors, .n response to better market conditions and improvements in the regulatory environment. In the manufacturing sector, this revival in investment seems to be broad-based, cutting across all industries and firm-size classes. A noteworthy element is the increase in investment for export activities. -10- D. Impact on Emplo1ment 1.15 Over the past five years, the non-oil economy has grown on average by about 4% p.a. While this is a better performance than originally anticipated, given the adverse impact of low oil prices, it is significantly below the rapid pace of growth achieved in the 19709. Thi3 slowdown in growth has led to legitimate concerns about the impact on employment. The analysis presented below shows that employment kept pace with labor force growth during the 1980-85 period, due to strong labor absorption in agriculture and the expansion of low wage employment in the rural non-farm and urban informal sectors. As a result, Indonesia did not face a major labor market disequilibrium, in terms of aggregate unemployment. However, there are worrying signs of open unemployment In urban areas (over 5% in 1985), especially among educated youths. More fuwdamentally, Indonesia's employment problem is primarily one of low productivity and low labor earnings, rather than excess supply. The large concentration of the work force in low productivity and low earnings activities, especially in trade and transport, is a matter of serious concern. There are indications that labor earnings in the informal sector have been adversely affected by the recent slowdown in agricultural growth and the sharp cuts in government spending. These aspects of the employment problem reinforce the importance of improving the quality of education and training programs, and of finding new sources of growth, such as from non-oil exports, over the medium term. Recent Labor Market Trends 1.16 Labor force growth declined from 3.0% p.a. during 1971-80 to 2.6% p.a. in 1980-85, primarily due to lower population growth rates and the expansion of schooling (outweighing the overall impact of increased female labor force participation rates at prime age)./1 The differential in the rate of growth of labor force between Java and the Outer Islands widened in the first part of the 1980s; transmigration programs, induced labor migration to new settlement areas outside Java, and a general increase in labor mobility as a consequence of improvements in infrastructure, have all contributed to the redistribution of the work force from Java to the Outer Islands. A rapid expansion in the flow and stock of educated manpower has also occurred. The proportion of the labor force that had not completed primary schooling declined from 67% in 1980 to about 50% by 1985, and the most rapid rate of growth in the labor force was registered among upper secondary graduates. The expansion of schooling can be expected to have a positive impact on labor productivity over the longer term, although the weak quality of education and training remains a major concern. 1.17 Trends in employment growth and the employment elasticity of demand are summarized in Tables 1.5 and 1.6. During the 1970s, output and employment expanded rapidly. The subsequent slowdown of economic activity was accompanied LI The SUPAS data show a labor force growth rate of 3.9% p.a. for the 1980-85 period. These data were adjusted for implauwibly high labor force participation rates recorded in 1985. Other researchers have derived an adjusted labor force growth rate of 2.9% p.a. - 11 - Table I.5: EPLOWiMENT GROWTH BY MAJOR SECTOR OF ACTIVITY IN JAVA, OUTER ISLANDS AND INDONESIA, 1971-85 JA Employment Share of growth rate (% p.a.) employment growth (%) Sector 1971-80 1980-85 1971-80 1980-85 Agriculture 0.69 0.91 14 24 Manufacturing 4.61 2.62 17 15 Trade/transport 4.45 4.76 28 49 Construction 8.91 3.02 9 6 Other services 6.01 0.78 32 6 Total & 2.76 1.93 100 100 Total ('000) 4& 6,521 3,308 ,Outer Isanld Agriculture 2.18 3.11 43 61 Manufacturing 5.47 3.30 9 6 Trade/transport '..59 5.86 19 21 Construction 7.89 3.55 5 3 Other services 7.34 2.42 24 9 Total & 3.56 3.35 100 100 Total ('000) 1k 4,685 3,378 Indonesia Agriculture 1.30 1.88 26 43 Manufacturing 4.81 2.78 14 10 Trade/transport 4.97 5.05 24 35 Construction 8.60 3.18 7 4 Other services 8.60 3.18 29 4 Total & 3.04 2.46 100 100 Total ('000) 4& 11,206 6,686 .A Employment data for 1985 were adjusted to reflect the adjustment of the labor force data. - Total includes oil, other mining and public utilities. "Not stated" item reallocated on a prorata basis. Source: Central Bureau of Statistics, SUPAS 1985. - 12 - Table 1.6: IMPLIED ENPLOEYMNT ELASTICITIES FOR INDONESIA, 1971-85 GDP growth rates (a p.a. at constant pricess EfoLoygMnt elasticities 1971-80 1980-85 1971-80 1980-85 Agriculture 3.76 3.12 0.35 0.60 Manufacturing 13.85 6.38 0.35 0.44 Trade/transport 8.61 4.57 0.58 1.10 Construction 14.65 3.31 0.59 0.96 Government and other personal services 9.39 8.31 0.69 0.15 Totalnon-_il a LfA6 5.03 Q.38 L.§2 LA Includes public utilities and rental incomes. Source: Central Bureau of Statistics and World Bank staff estimates. by important changes In the pattern of labor absorption. In contrast to the broad-based pattern of employment growth during the 1970s, the impetus for employment creation during the first half of this decade cam more narrowly from agriculture, trade and transport. Real agricultural growth continued to remain strong, with rice and non-food farm activities (excluding forestry) growing relatively faster than other food crops, and with a rapid expansion of tree crops outside Java. This directly improved the labor absorptive capacity of agriculture (despite some tendency towards mechanization in rice) and also supported the growth of off-farm employment (in agro-industries, trade and transport). On the other hand, the reduction in real government expenditure, due to declining oil revenues, contributed to a sharp fall in employment growth in government services and construction. Nanufacturing employment growth also decelerated, although not as sharply. These trends were of4'qet by rapid employment growth in the urban and rural informal sectors (trade and transport), albeit at reduced levels of productivity and earnings. On the whole, employment per unit of output grow faster in 1980-85 compared to 1971-80, containing the adverse impact of a slowdown in economic growth on open unemployment. 1.18 The deceleration of economic activity has resulted in slower growth of earnings and real wages, particularly in the construction and trade sectors (see Table 1.7). Real wages in construction would have declined further without active government policies to protect labor-intensive construction activities. The relatively strong growth and changes in product composition allowed a rapid absorption of labor in agriculture without substantially depressing real wages. Only in manufacturing does there appear to have been any significant increase in real wages since 1982. , 13 - Table.17: IPD ,. 5 I v OR BARNXNGS, 1976-86 Real, WaJJSIQmZ {1tl. ____ Labor productivity Agriculture Rural cos*t::i,C0Lion nAUfacturing (Rn '-O0/worker) r (hoeing) (carptnter) Trade 1977 100.0 100.0 100.0 1980 102.2 118.8 110.0 1,530 1982 123.6 137.6 120.0 1984 116.6 129.2 131.0 .. 1986 124.5 134.8 .. 1,258 i A At 1983 prices. & Figure refers to 1985. Source: Central Bureau of Statistics; Canter for Agro Economic Research; and World Bank staff estimates. Indonesia's =13mloyment Problem 1.19 Overall, in terms of conventaonal measures of labor market disequilibrium -- rate of open unemployment and underemployment -- Indonesia does not appear to face a major excess labor supply. Observed open unemployment for the country as a whcle has increased only marginally (from 1.78 in 1980 to 2.1% in 1985), although much higher rates are found in the urban formal sector. Judging from data on hLours worked alone, underemployment would appear to be a major problem in Indoniesia, especially in rural areas. About half of those employed (48% of the rural work force and 55% of agriculture workers) were recorded as working less than 35 hours a week in 1985, as compared with 41% reported as underemployed according to the same criteria in 1980. But these figures considerably overstate the true extent of underemployment in terms of willingness to work longer hours. For example, in the 1982 SUSEIAS survey, only 16% of those working less than 35 hours a week in rural areas indicated that they would be available for extra work. This much lower underemployment level is supported by data on the age-sex distribution for hours worked in 1985 which indicate that females in childbearing and rearing ages working relatively few hours (10-24), and young males at achool ages (15-19) predominated among the recorded rural underemployment. LI A detailed analysis of the underemployment issue is contained in Robert L. Rucker, A Pr1m1Mzy View of Indonesia's lb"loyent Problem and Some Ontions for Solving It (USAID, Jakarta, October 1985). - 14 - 1.20 The low observed rates of open unemployment are a reflection of Indonesia's employment structure. The 1985 SUPAS data show that 638 of total employment was located in Java; more than half of all employment is in agriculture and over 70% In rural areas. Employment outside agriculture Is concentrated in services, with manufacturing accounting for only 20% of non- agricultural employment. Outside government services, low and unstable earnings in informal sector activities predominate In urban areas. The considerable flexibility of rural labor markets and urban informal labor markets allows a rapid expansion of employment during periods of low economic growth, but at reduced real earnings. A major development challenge for Indonesia is to find high return work for both new entrants to the labor force and those currently employed in low earnings activities. This will require a substantial expansion of employment in the formal sector, especially in manufacturing. Equally important is the need to increase real incomes of those who will continue to be employed in the informal sector. 1.21 Labor markets in the urban formal sector are less flexible. Consequently, measured open unenploymeng is significant in urban areas, reaching 5% in 1985. Moreover, there are several disquieting signs in the structure of urban unemployment. First, as in the mid-1970s, urban unemployment remains high for younger ages and among secondary school graduates. Second, the incidence of unemployment has increased noticeably for the age group 20-24 (19% in 1985) and among upper secondary school leavers (13% in 1985). Finally, tertiary level unemployment has also begun to emerge as an important concern, especially among females (11% in 1985). These trenids appear to have intensified since 1985. The growing urban open unemployment, especially among high school graduates, raises important issues about the quality of the labor force. A strong effort will be needed to improve the quality and work relevance of education and training programs in Indonesia. - 15 - CHAW= 2 A FRAMEWORK FOR ECONOMIC RECOVERY AND GRWTH A. Introductn 2.01 As reviewad in Chapter 1, the Government's adjustment program has helped to reduce external and domestic imbalances, while also sustaining a better-than-expected rate of economic growth. Given the severity of the external shocks, it was clear from the start that the adjustment process would take several years to complete. Durlng this transition period, special external assistance has been required to cover the financing gaps in the balance of payments and. the Budget. This comblnation of government policies and external support has prevented economic disruption and laid the foundations for economic recovery and growth over the medium term. The key development issues and policy priorities which are likely to shape the future course of the Indonesian economy are summarized below in Section B. This is followed in Section C by a discussion of medium-term prospects, based on a set of illustrative nacroeconomic projections. Subsequent chapters then provide a more detailed review of policy options in the key areas of: (a) mobilizing foreign exchange and public resources; (b) policies for structural change; (c) environment and natural resource management; and (d) public expenditure priorities. B. Development Strategy and iolicy Priorities Restoring Stability 2.02 Continued progress on adjustment will be required over the next couple of years. Given the uncertain market prospects for oil and the large overhang of external debt, it is necessary to reduce further the current account deficit and to ensure that future external shocks can be 'landled without undue disruption to the domestic economy. As in the retent past, part of this adjustment will come from efforts to increase non-oil exports and non-oil taxes. In addition, there will be a need for continued caution in macroeconomic . The key elements of the macroeconomic program are: (a) tight expenditure management to reduce the budget deficit; (b) careful scrutiny of the public investment program to maximize returns from limited resources; (c) monetary policies to restrain aggregate demand and curb inflationary pressures; and (d) timely steps to ensure that the competitive gains from the real exchange rate adjustment are preserved. 2.03 The Budget for 1988/89, as reviewed in Annex 1, reflects the Government's commitment to continue with the fiscal restraint and spending priorities followed over the past two years. Recognizing the uncertainties in - 16 - the oil market, the Budget has assumed an average oil price of US$16/barrel, US$1 lower than realized in 1987/88. For the third year in a row, the Government has decided to freeze civil service salaries and real capital spending is projected to fall. Because of this expenditure restraint, and much higher reliance on domestic revenues, net domestic expenditures are expected to fall to about 1% of GDP, compared to 4% of GDP In 1987/88. This trend demonstrates tne austere stance of the Budget. If complementary measures are taken to improve the financial position of public enterprises, it should be possible to reduce credit growth to the public sector. This would enable the bankLng system to support an expansion of private sector activity within an appropriate and conservative monetary policy. 2.04 During this period of adjustment, Indonesia will continue to depend upon soecial external assistance, in the form of fast-disbursing program aid and local cost-financing, to cover the financing gaps in the balance of payments and the Budget. The projections presented below suggest that the requiremeuts for special assistance will total US$2.4 billion in 1988/89 and US$1.5 billion in 1989/90. With this support, Inionesia will be able to finance the imports and investments required to boost growth in the non-oil economy to 5% p.a. by the end of this decade. At the same time, the provision of special assistance has to be seen as a temporary expedient, matched by the Government's cwn efforts to iuprove non-oil export perfoJzmance and public resource mobilization. As the external and domestic financing gaps are narrowed, special assistance can and should be phased out. During the 1990s, there will be greater scope for commercial borrowing, while the role of external assistance will again focus on financing development projects, in both the public and private sectors. Preparing for Medium-term Growth 2.05 For the 1990s, the foremost challenge facing Indonesia is to generate a pattern and pace of economic growth that will provide income and employment gnnortunzei& to a rapidly expanding labor force. So far, despite the slowdown in economic growth, the employment situation has not worsened markedly, because of the steady performance of agriculture and the expansion of low wage employment in the rural non-farm and urban informal sectors. But over the medium term, a continuation of the recent growth trend for the non-oil economy (3-4% p.a.) would lead to a severe decline in average labor earnings. Open unemployment could also reach threatening proportions in urban areas, especially among educated youths. Hence the importance of restoring growth of the non-oil economy to 5-6% p.a. during the 1990s. Given the flexibility of the labor market, the policies for growth and employment are largely complementary. For example, non-oil export development will support growth and lead to a more labor-intensive pattern of production. Similarly, policies aimed at encouraging an efficient and more diversified growth of agriculture are essential to provide better income opportunities to farmers and support the development of rural off- farm employment. Targeted measures will be needed, however, to improve labor absorption in the services sector, boost employment prospects in the Outer Islands and improve the quality of the labor force. Of particular importance in this regard are the Government's programs for funding 06N, developing rural - 17 - infrastructure and improving the quality of education, and programs geared to reducing fertility and improving family health. The Government also has to enss that its policies do not unintentionally discourage employment (e.g., by hindering informal activities or subsidizing farm mechanization). 2.06 Recovery in economic growth is one of Indonesia's primary development goals for the medium term. Yet, to be sustainable, this growth will have to be achieved with due regard for the 'environment and natural resource base of the country. As in the past, the major portion of economic activity in Indonesia will continue to be linked directly to the development and primary processing of natural resources. Indonesia is fortunate to have a vast and diverse natural resource base to support a growth-oriented development strategy. In addition, many of the Government's policies for efficient economic growth and reduced population growth will also have favorable impacts on the environment and natural resource management. Even so, economic growth will put pressure on the Outer Island's forest resources and intensify demands for the limited resources, especially water, on Java. Industrial and energy development will also add to water and air pollution, unless appropriate preventive measures are taken. For these reasons, continued improvements in standards of living will depend crucially on sound environmental management. Furthermore, environmental problems are inextricably linked to population pressures and poverty. These Interrelationships need to be addressed in an integrated manner. The primary goal becomes sustainable development: i.e., to maximize the next benefits from existing resources (human, natural and produced capital), while maintaining the services and quality of these resources over time. Steps taken now at relatively low expense can reduce environmental problems and their adverse social impact, and provide a sound basis for future development. 2.07 Another critical constraint on the pace of economic growth is the availability of foreign exchange. Import demand will rise with higher production, incomes and investment, as well as in response to the ongoing program of trade policy reforms. At the same time, oil/LNG exports are not going to generate as much foreign exchange as in past years. Hence, the central role of non-oil exorts in the Government's development strategy. There are already encouraging signs that non-oil exports are responding to the devaluation of 1986 and the subsequent trade and industrial policy reforms. Non-oil export growth has been strong over the past year and there is now a much more diversified export base. The projections presented below suggest that non-oil export earnings will have to more than double over the next seven years, reaching US$20 billion by 1994/95. This represents a real growth rate of 11% p.a. during the next two years and 6-7% p.a. over the medium term. Achievement of these growth rates will require s.: Jtantial investment in new export capacity. Export-oriented investment rose sharply in 1987 and this trend can be expected to continue, provided: (a) export incentives are maintained; (b) further progress is made on removing trade barriers and simplifying domestic regulations; (c) the financial sector is able to respond to the needs of exporters for credit and equity; (d) appropriate institutional support is developed to ease access to export markets; and (e) management of resource leases for industries such as plywood is improved to ensure a sustainable supply of raw material. - 18 - 2.08 Given the declining role of oil revenues, major structural changes will be required to generate employment and export earnings from the non-oil economy. Of particular importance is the development of an efficient and dynamic industrial sector. Recent trade and industrial uolicv reforms have helped to improve incentives for industrial restructuring and new investment in export- oriented activities. The Government is coitted to sustain and extend this deregulation drive. For trade policy, this means continuing to reduce the coverage of import licensing restrictions, quotas and bans, and rationalizing the import tariff structure. These measures will provide a clear signal to domestic producers that both the level and variance of protection will be reduced over the medium term. At the same time, follow-up actions are anticipated to simplify domestic regulations further and to reduce the scope of industrial licensing. In the first instance, this will mean proper implementation of recent policy changes (e.g., on broad banding). The deregulation drive can also be extended by: (a) opening additional areas to domestic and foreign private investment; and (b) streamlining and making license approval and other procedures more automatic. 2.09 The ability of business enterprises to respond to the ongoing program of trade and industrial policy reforms, and to support the non-oil export drive, will depend critically upon complementary development of the financial sector. While recent financial sector reforms have led to rapid deposit growth, they have been less successful in improving the availability aad cost of long-term investment funds. This is especially important for the small-scale and export sectors, where the absence of established track records in production and marketing often constrains access to institutional credit. In addition, a significant portion of the corporate sector is undergoing financial distress as a result of cost pressures and the adverse domestic market conditions over the past few years. The ability of manufacturing firms to grow in the future, therefore, will rest not only on physical restructuring to reorient production toward export markets, but also on financial restructuring to generate sufficient funds to undertake the required investment. In turn, the ability of the financial sector to meet these funding needs will be determined by actions to improve the efficiency of the banking system and develop capital markets. The longer-term objective should be the creation of an efficient financial market providing potentially profitable enterprises access to required risk and debt capital, supported by strong accounting, information and audit systems. 2.10 Although private investment is already beginning to rise, the GoverDment's program of fiscal austerity will constrain public investment in the near term. The capacity of the Government to support investment and economic growth over the medium term will depend on efforts to improve Rublic resource mobilization. Recent tax reforms have helped to increase non-oil taxes from 6.3% of GDP in 1983/84 to 8.6% in 1987/88. However, the non-oil tax effort is still significantly below those in comparable Asian countries. With continued progress in improving tax administration, it should be possible to increase non- oil tax revenues to 12% of GDP by the mid-1990s. In addition, a broader effort to improve the finances of public enterprises and achieve greater cost recovery from public services is needed. Greater cost recovery will not only induce more efficient use, but will also improve the quality of service, by helping to - 19 - finance better O& practices. Cost recovery can take the form of tariff adjustments (e.g., for electricity and fuels), reduced subsidies (e.g., for pesticides and fertilizer) and user fees (e.g., for irrigation, transport and social services). To facilitate public acceptance and compliance, it is important that cost recovery be associated with improved services, that account be taken of other fees already paid by beneficiaries, and that provision be made to protect poorer groups in society. 2.11 Finally, progress on public resource mobilization will have to be matched by a careful review of public exRenditure priorities. Particular attention has to be given to efficient operation and maintenance (0GM) of public infrastructure. Otherwise, the productivity of this infrastructure and the quality of public services would decline. For the public investment program, sectoral strategies will need to reflect Indonesia's broad development objectives and priorities. As noted above, these include: (a) generating employment and incomes; (b) promoting non-oil exports; (c) developing human resources; and (d) improving environmental management. The recent focus of development spending on agricultural development, electricity and transport infrastructure, and human resource development programs in education and health is clearly consistent with these objectives. In the short term, continued priority should be given to completing ongoing projects. As the resource position improves, it will be possible to finance an expanded public investment program. However, in all areas, the Government intends to review its role in investment activity during REPELITA V, bearing in mind the potential contribution of the private sector and the scope for improving project implementation capacity. C. nedium-term Prosnects The External Environment 2.12 A major objective of the Government's adjustment program has been to improve the economy's capacity to better withstand external shocks. Even so, Indonesia's economic fortunes remain strongly linked to conditions in the world economy, particularly the oil marlet. The medium-term prospects are also affected by expected trends in other commodity prices, world trade, interest rates and exchange rates. Table 2.1 summarizes the key external assumptions underlying the results of the macroeconomic projections presented in this section. 2.13 The sharp worldwide slump in stock markets in October 1987 was a reflection of the turmoil in the world economy that had beon building up for several years. The impact of this on business confidence and the implications for world economic growth will critically depend on appropriate policy responses by governments. In the near term, economic growth in OECD countries is expected to be adversely affected. This would constrain the export prospects of developing countries, worsening their already acute external payments problem. Over the medium term, with concerted efforts by the world's leading economies to - 20 - counter the damaging effects of persistently large internal and external imbalances, some revival in real growth (at around 3% p.a.) should be possible. This in turn will support the effort of developing countries to increase their export revenues. With adequate progress on restraining the large fiscal deficits, especially in the United States, a reduction in real interest rates could also be achieved which will help lower the burden of external debt payments. 2.14 Following the 1986 collapse, oil prices rebounded to US$17-18/barrel in 1987, partly due to OPEC's ability to restrain production to 17.7 mbd (3% below its 1986 average). There are some indications that enforcement of quotas may be difficult in the immediate future, due to the ongoing Gulf War and budgetary difficulties in Saudi Arabia, the world's largest oil exporting country. The average oil price is therefore expected to fall back to US$16/barrel during 1988 and remain at this level in nominal terms through the end of the decade. With the revival of world economic activity and as non-OPEC oil producing countries Table 2.1: SELECTED INDICATORS OF INTERNATIONAL ECONOMIC ACTIVITY, 1987-2000 Growth rate (t g.a.) Est... Projected 1987- 1990- 1995- 1987 1988 1989 1990 1995 2000 1990 1995 2000 Economic activitX OECD growth (% p.a.) 2.6 2.4 1.3 1.6 2.7 3.0 1.8 2.7 3.0 Price indices (1985-100) Commodity prices in conatant dollars /A 77.0 78.6 74.6 77.3 91.7 89.2 0.3 3.3 -0.6 Manufacturing unit values in current dollars A 130.8 135.0 139.3 143.7 175.4 214.1 3.2 4.1 4.1 Oil grices (US$/bbl) : 1985 dollars 13.2 11.9 11.5 11.1 16.0 18.7 -1.8 5.1 3.2 In current dollars 17.2 16.0 16.0 16.0 28.1 40.0 -2.4 11.9 7.3 Interest rates (%) LIBOR Xc 7.2 8.5 8.5 8.1 7.6 8.1 kwal interest rate Zd 3.9 3.3 2.8 2.0 2.5 2.5 .1 Nominal price index for 33 commodities (excluding energy) deflated by the World Bank's manufacturing unit value (MUV) index. Ab The trend has been smoothed for the 1987-90 and 1990-2000 periods. i; Six-month London Interbank Offered Rate. if tLIBR deflated by the change in the US GNP deflator. Source: World Bank staff estimates. - 21 - reach their production capacities, the demand for OPEC oil will expand allowing some recovery in oil prices during the 1990-95 period. Even so, the average oil price is projected to reach only US$28/barrel by 1995; in real terms, this is less than half of the peak levels achieved in the early 1980s. Beyond 1995, the current indications are that oil prices will increase by 3% p.a. in real dollar terms, fueled by growing world demand and a larger dependence on OPEC supply. 2.15 The implications of the projected trends in oil and commodity prices for Indonesia's term of trade are summarized in Table 2.2. The market for rubber is expected to remain flat until 1990, but timber and coffee prices are expected to improve. Overall, the commodity price index will be higher in 1990, as compared with 1987. Indonesian manufactured exports will also benefit from the projected increases in the world prices of manufactured goods. These trends will help offset the impact of low oil prices on Indonesia's terms of trade over the next couple of years. During the 1990s, the prices of both commodity and manufactured goods will revive, aided by a more buoyant world demand. Given the oil price outlook, Indonesia can expect a welcome increase in its terms of trade in the longer term. However, even by the year 2000, the terms of trade will still be lower than the early 1980s. Table 2.2: INDONESIA'S TERKS OF TRADE, 1982/83-2000/01 ta (1983/84-100) 1982/83 1987/88 1988/89 1989/90 1990/91 1995/96 2000/01 ExDOrt price index Total exports 110.0 81.4 82.8 85.3 88.3 136.5 186.7 Non-oil exports 96.8 112.4 117.5 122.1 129.5 171.1 209.5 ILort pXrle index Total imports 100.6 117.5 121.5 125.4 129.6 159.2 193.4 Non-oil imports 100.3 116.5 120.6 124.5 128.8 158.8 192.9 Terms of trade index Total 109.3 69.2 68.1 68.0 68.2 85.8 96.5 Non-oil 96.5 96.5 97.4 98.0 100.5 107.7 108.6 1A The terms of trade index is calculated as the ratio between export and import prices for goods and non-factor services. Source: World Bank staff estimates. - 22 - Th ZlRet ChaltMle 2.16 Growth in the labor force is determined by the expans ion in the- population, changes in the age structure, and participation rates. As noted, population growth in Indonesia has slowed over the past 15 years, reflecting the spread of family planning, growth in incomes and increased education. This trend is expected to continue in the future, with the pace of population expansion declining to 1.8% p.a in the early 1990s and to 1.6% p.a. in 1995-.000 (see Table 2.3). Regarding participation rates, the projections wague an increase in the prime age group in line with past trends, but a decline in participation at young ages (10-19 years) due to expanded schooling. The migration levels have been adjusted downward because of slower expected rates of migration from Java and Bali. 2.17 Based on these assumptions, the total labor force is projected to increase by 2.3% p.a. over the 1990-95 period, falling to 2.2% p.a. in 1995- 2000. The labor force in the Outer Islands will grow faster than in Java, reflecting continued net migration, a higher rate of population growth and a younger age structure. Similarly, the work force in the urban areas will expand at a higher pace than in the rural areas, partly due to net migration but also due to an increase in labor participation rates. By far the largest proportional increment in the labor force will consist of young, upper secondary school graduates residing in urban areas. TIbl.2.23: POPULATION AND LABOR FORCE GRO1WTH RATES, 1985-2000 Growth rate (% p.a) Numbers (million) 1985-90 1990-95 1995-2000 1985 1990 2000 A. Oveall Population 2.0 1.8 1.6 164 181 214 Population 10+ 2.5 2.2 1.8 120 136 168 Labor force 2.3 2.3 2.2 60 67 83 B. Labor force by location Java 1.8 1.7 - Rural (0.7) (0.6) - Urban (4.5) (4.1) Outer Island 5.9 2.8 - Rural (3.0) (2.2) - Urban (2.4) (2.8) Source: NUDS Project and World Bank staff estimates. - 23 - 2.18 These projections imply that, during the 1990s, Indonesia will need to find productive employment for an additional 1.7 million workers every year. At the same time, Indonesia will need to improve the earning prospects for existing workers and address the urban unemployment problem. A continuation of the 1982-87 real growth trend would lead to a severe decline in average labor oarnings, as too many workers compete with each other to share limited total incomes. Open unemployment could also reach threatening proportions in urban areas, especially among urban educated youths, as the capacity of the organized sector to absorb skilled manpower becomes constrained due to lack of resources. 2.19 All of these factors suggest that employment creation and improvements in the quality of the labor force must be central concerns of Indonesia's development strategy. Future employment prospects are closely tied to the pace and pattern of economic growth. The non-oil economy needs to grow by 5-6% p.a. during the 1990s to absorb the labor force at rising levels of productivity and income. While a strong agricultural sector will be essential to absorb a large proportion of the incremental labor force, the manufacturing sector would need to play a dynamic role in absorbing a much larger proportion of new employment than in the past. This underlines the importance of the expansion of manufactured exports, which would provide the basis for such growth. Within agriculture, food crops can be expected to absorb only limited amounts of additional labor, so that the expansion of non-food activities, especially on the Outer Islands, would be needed to expand agricultural employment and incomes. A higher overall rate of growth of output and investment would also permit a higher rate of employment growth in construction and higher earnings in services employment, especially in the informal sector, than in the 1980s. j 2.20 In addition to the expansion of producti-e employment opportunities, a critical task facing Indonesia is to improve the quality of the labor force. Without such improvements, Indonesia will find it difficult to compete effectively in world markets, and develop a sophisticated and diversified industrial base. Improvements in productivity also provide the best means for sustainable increases in real earnings. A strategy to improve the quality of the labor force, by enhancing the quality of education and training, is discussed in Chapter 6. Economic Recovery and Growth 2.21 The non-oil economy needs to grow by 5-6% p.a. during the 1990s to absorb the labor force at rising levels of productivity and income. This target is built into the GDP projections summarized in Table 2.4. However, as already noted, the pace of economic recovery will be constrained in the short term by impact of low oil prices and the burden of external debt on Indonesia's balance of payments and budgetary position. Accordingly, the growth of the non-oil economy is projected to average 4.5% p.a. over the next two vears. For the longer term, the contribution of the oil sector will also decline, with falliag crude production projected from the early 1990s. These factors reduce the average growth rate of total GDP to 4.1% p.a. in 1987-89 and 4.9% p.a. over the nqxt decade. - 24 - Table 2-4: GROWTH AND COMPOSITION OF GDP, 1987-2000 _ Growth rates (t 2a._ Share in GDP (1) Estimar& Projected Estimate Projecte 1982-87 1987-89 1989-2000 1987 2000 Gila/' sectors - .92 D1i Crude oil & gas 1.3 1.7 -1.3 16.4 8.1 LNG & refined oil 11.0 4.7 0.4 3.8 2.4 Non-oil sectors 4.0 459 79.B 89.5 Agriculture 3.1 2.7 3.5 23.7 19.9 Mining 5.3 3.5 7.8 0.9 1.3 Manufacturing 5.3 7.0 8.8 9.1 14.4 Construction 2.0 5.0 6.3 5.7 6.7 Other services 4.6 4.8 6.3 40.4 47.2 Total GDP 3.8 Li 4.9 100.0 100.0 Source: World Bank staff estimates. 2.22 At the sectoral level, agriculture's contribution to GDP is expected to decline steadily during the 1990s. Yet, because of the importance of the apgicultural sector in the Indonesian economy, it will continue to play a central role in sustaining economic growth and absorbing labor over the medium term. Although the food crop subsector, especially rice, will continue to be the main source of output and employment, non-food activities will need to provide the bulk of additional employment in agriculture over the medium term. As shown in Table 2.5, a medium-term agricultural growth rate of 3.5% p.a. will support direct employment creation of over 0.6 million p.a. at higher levels of productivity. As discussed at length in last year's Economic Report, agricultural development needs to be supported by policies that encourage farmers to raise their productivity and diversify their production within an efficient cropping system. This involves bringing the pattern of input and output prices more closely in line with world prices, improving rural infrastructure, providing more responsive research and extension services, and reducing regulatory restrictions. 2.23 The manufacturing sector will need to become an increasingly important source of economic growth and employment generation over the medium term. In the past, the manufacturing sector's employment impact was constrained by the excessive dependence on relatively capital-intensive, import substituting and domestic demand based activities. For the future, the most promising route for employment expansion in the manufacturing sector is to enhance profitability in export industries, since these industries are relatively labor intensive and have the best prospects for market growth. The projected acceleration of the - 25 - Tabo 2..5: PROJECTED EXPANSION OF EMPLOYMENT, 1990-2000 Annual increment Ggowth rate (a 2.a.) Share of 1mployment(% (million) Value added Employment 1985 2000 Agriculture 0.55 3.5 1.5 55 48 - Food (0.07) (2.3) (0.2) (44) (32) - Others (0.48) (5.0) (4.7) (11) (16) Manufacturing 0.46 9.0 5.4 9 14 - Exports (0.34) - Others (0.12) Construction 0.21 6.3 6.3 4 6 Services 0.44 6.2 1.8 32 32 tiotal non-otl 1.65 6.0 I_S 100 10. Source: World Bank staff estimates. sector's real growth to 8-9% p.a. in the 1990s assumes that an appropriate policy framework will be put in place to boost manufactured exports. Key elements of this framework are maintenance of a competitive exchange rate and continued progress on trade and industrial deregulation, designed to reduce the domestic cost of production. As described in Chapter 1, the Government has already demonstrated its commitment to moving in this direction. At the same time, measures will be needed to improve the availability and affordability of industrial finance. This is especially true for small-scale and exporting firms, where the absence of established track records in production and marketing often constrains access to institutional credit. With appropriate support, these firms can make a significant contribution to employment generation over the medium term. Overall, the strong growth projected for the manufacturing sector will create an estimated 0.4-0.5 million jobs p.a. during the 1990s. 2.24 The construction and services sectors are also projected to grow rapidly in the 1990s. Infrastructure based services, such as electricity and transport, will need to expand through appropriate levels of investment, as well as by better O&M practices, pricing and deregulation policies. An adequate supply of these services will be needed to avoid bottlenecks that would stifle the progress of the commodity producing sectors. The efficiency of transport services is also important, to reduce the domestic cost of production of industrial and agricultural products. Construction and other services will benefit from the general revival of investment and real growth in the economy. Tourism is also expected to continue expanding rapidly, in response to recent government deregulation measures. The projected expansion of the services sector will be an important source of labor absorption and improved labor productivity. In conjunction with more specific policies, such as labor- - 26 - intensive public expenditure programs and a supportive attitude towardL Informal sector activities, the services sector can substantially enhance earnings for workers currently engaged in low-wage activities, while providing additional productive employment of 0.5-0.6 million p.a. in the 1990s. 2.25 As already noted, the contrLbution of the oil sector to the Indonesian economy is projected to gradually decline in the years ahead. The future course of oil production will depend on OPEC policies, the rate at which reserves are added through development of known fields and discoveries of new fields, and the economies of secondary and tertiary recovery, all of which are sensitive to the projected level of oil prices. Cive,a present price expectations, oil output is projected to reach 1.5 obd in 1990 and then fall by 1.5% p.a. LNG (including LPG) production increased by 10% to around 870 trillion BTU in 1987 and is expected to reach 1,070 trillion BTU by 1990, reflecting the new LPG contracts with Japan, and LNG contracts with Taiwan (Province of China) and Korea. In the absence of additional long-term contracts, LNG output will remain flat thereafter. In view of the projected decline in oil/LNG output and the recovery in other sectors, the share of oil/LNG in total GDP will drop to 11% by 2000, as compared with 20% in 1987. 2.26 The implications of this growth path for national incomes and expenditure are summarized in Table 2.6. Over the next couple of years, national income is projected to grow by 4% p.a., markedly better than in the recent past. This provides scope to achieve significant improvements in Iale 2..6: GROWTH AND COMPOSITION OF EXPENDITURE ON GDP, 1987-2000 (at 1983 prices) Growth rates (% 2.a.) Share in GDP (%) Estimate Projected Eslt Projected 1982-87 1987-89 1989-2000 1987 2000 Consumption 2.6 3.5 5.1 69.4 69.9 Fixed investment -3.9 4.9 7.4 18.3 24.3 - Public (-5.9) (-3.5) (7.0) (8.5) (9.1) - Private (-2.0) (11.7) (7.9) (9.8) (15.2) Exports La 4.6 6.4 2.6 24.5 20.0 Imports Lb -9.1 3.4 5.9 14.8 16.2 GDP 3.8 4.1 4.9 100.0 100.0 GNP 3.9 4.1 5.0 96.1 97.2 GNY 1.6 4.0 5.8 87.9 96.0 LA Includes goods and non-factor services. Source: World Bank staff estimates. - 27 - consumption and private investment. Subsequently, the growth of national income picks up to 6% p.a., due to the recovery in economic activity and expected improvement in the terms of trade. This allows a sustained rise in per capita consumption, even as real investment expands rapidly (7-8% p.a. during the 1990s) to support economic recovery. By the end of the 19909, pier capita consumption is projected to be 50% higher than its present level in real terms. Inyegt=t and Savnj 2.27 A strong investment effort is essential if the Indonesian economy is to sustain the projected grovth rates of economic activity and non-oil exports. The average fixed investment rate (at current prices) has weakened in recent years, falling from 24% in the early 1980s to an estimated 20% in 1987. Much of this adjustment has occurred in the public sector, where lower oil revenues led to a rephasing of large projects and major cutb-cks in other areas of development spending. As a result, public investment is estimated to have fallen by about one quarter over tne past five years. The private sector's investment effort has also suffered, due to the direct impact of the deteriorating terms of trade on private incomes and savings, as well as the adverse multiplier effects of a slowdown in aggregate demand. In the short term, some recovery in economic activity can be achieved through improvements in capacity utilization. Longer-term gains in the efficiency of capital use are also possible, especially if more attention is given to proper operations and maintenance (see Chapter 6). However, sustained development during the 1990s will require a substantial buildup of production capacity in the agriculture and manufacturing sectors (largely through private investment), as well as supporting improvements in the economic infrastructure (e.g., irrigation, power, telecommunications, transport). As a result, it is estimated that the fixed investment rate will need to be maintained around 20% over the next two years, and then raised to 23% by the mid-1990s. 2.28 Foreign savings will play an important role in supporting the investment rate during the present adjustment period. However, during the 1990s, the projected expansion of investment will require a strong effort to increase domestic savings and resource mobilization. An indicative financing program for investment is summarized in Table 2.7. This shows that the national savings rate has to be raised from the present level of 19% to 25% by the mid- 1990s.AI Of particular importance is the projected improvement in public savings, to reduce the Budet's dependence on special external assistance, and to support an expansion of public investment (by 7% p.a. in real terms) over the medium term. The underlying assumptions on public finance are set out in Table 2.8. Key assumptions are that: (a) non-oil tax revenues will be raised from 9% of GDP in 1987/88 to 12% by the mid-1990s, through continued improvements in tax administration /2; (b) domestic prices will be adjusted to al Indonesia achieved a savings rate of 25% in the early 1980s based on the oil boom. & A further long-term decline in oil prices will necessitate an even stronger non-oil tax effort, requiring selective increases in the tax base and rates. - 28 - Tbe2.7: PRWYOJECTED INVESTMENT AND ITS FINANCING, 1987/88-2000/01 (% of CDP at current prices) ALtim" ~~~Projeactions 1987/88 1988/89 1989/90 1990/91 1995/96 2000/01 Total investment .22 219 21L4 223 2 3L Fixed investment 19.7 19.8 20.2 20.7 23.0 24.3 Changes in stocks 2.5 2.1 1.7 1.6 2.0 2.0 Financed by: National savings 19.4 19.4 19.8 20.8 24.? 26.0 Foreign savings La 2.8 2.5 2.1 1.5 0.3 0.3 Public investment L LA LA i LA Financed by: Public savings 6.5 5.' 5.8 6.1 9.1 8.6 Foreign borrovings 2.6 2.1 2.0 1.8 0.5 0.6 Net bank borrowings 0.8 0.7 0.6 0.7 -0.5 0.2 Private investment L2t ILA 1 134 L 12-1 1LI Fixed investment 9.8 11.3 11.8 12.1 13.9 14.9 Changes in stocks 2.5 2.1 1.7 1.6 2.0 2.0 Financed by: Private savings 12.9 13.7 14.0 14.7 15.6 17.4 Foreign borrowings 1.3 1.5 1.0 0.7 1.0 1.3 Net bank borrowings ik -1.9 -1.8 -1.5 -1.7 -0.7 -1.8 Memo it : change in net foreign assets 1.1 1.1 0.9 1.0 1.2 1.6 JA, Foreign savings is equal to the sum of public and private foreign borrowingp less change in net foreign assets. j& Fixed investment only. Investment in stock changes ls assumed to be financed by the private sector. & Defined as changes in private credit minus changes in broad money. Source: World Bank staff estimates. reduce the budgetary subsidles for petroleum, fertilizer and pesticides; (c) current expenditures will be constrained through improved cost recovery policies for 0&K; and (d) public enterprLse savings will be increased, through improvements in their financial and operating performance. Publlc savings also beneflt from the reduced budgetary burden of external interest payments during the 1990s. Issues of public resource mobLlization are discussed more fully in Chapter 3 below. - 29 - Table 2.H: PR0JECTED STRUCTURE OF PUBLIC FINANCZ, 1987/88-2000/01 (% of CDP at current prices) Estsumte Projections 1987/88 1988/89 1989/90 1990/91 1995/96 2000/01 A. Central and local governments Domestic revenues and grants 19.6 1 18. iLI 21.0. 2LA Oi and LNG 8.6 6.9 6.4 6.1 7.5 6.2 Non-oil taxes 8.6 9.4 9.8 10.1 11.6 11.6 Other 2.4 1.9 1.9 1.9 1.9 1.8 Curre=n sxUMniLtur 14iZ ILI 1LI 13.8 ILI l2 External interest 3.2 3.5 3.3 3.1 2.0 1.4 Subsidies 1.0 0.7 0.4 0.4 0.2 0.1 Other 10.5 10.1 10.4 10.4 11.5 11.4 m L39 40 LI 73 6i CBP1SLL3tZal iura Li LQ 1.1 Li 7.2 Overall balance -.0 -. Q :1-L Q..4 -,JI Financed by: External loans (net) 2.6 2.1 2.0 1.7 0.6 0.6 Asset drawdown 0.4 0.1 0.0 0.2 -1.0 -0.1 B. Public enterprises Savings 1.6 1.8 1.8 1.8 1.8 1.9 Net foreign borrowing 0.0 0.0 0.0 0.1 -0.1 0.0 Net bank borrowings 0.4 0.6 0.6 0.5 0.5 0.3 17imel investible resources LQLA LA LA L. L. C. Total nublic investment Li 8 LA, LA Li LA Source: World Bank staff estimates. 2.29 Along with a concerted effort to improve public resource mobilization, greater emphasis will have to be given to private investment, especially to support the export drive. There are already signs of a recovery in private investment, in response to the Improved profitability of export activities and reductions in licensing restrletions on both domestic and foreign investors. But, to achieve the projected expansion of economic activity and non-oil exports, the teal growth rate of private investment will have to be sustained at 88 p.a. during the 1990s, raising the private sector's share of total investment - 30 - from 54% at present to 63% by the year 2000. This expansion of private investment will require efforts to mobilize private savings (to grow from 13- of GDP now to 16% of GDP by 1995/96) and continued progress towards a "low-costw business environment. Domestic interest rates will play a key role in this regard. The long-term nominal lending rates will need to be reduced to stimulate private investment and, yet, real deposit rates will have to be maintained sufficiently positive to mobilize financial savings. Appropriate macroeconomic policy and complementary steps to enhance the efficiency of the financial system will assist in achieving these objectives. The related needs for developing the financial system, and improving its efficiency, are discussed in Chapter 4. 2.30 The monetary program underlying these projections is summarized in Table 2.9. Domestic inflation is projected around 5% p.a., slightly above international rates. With real income growing by about 5% p.a. and providing for a gradual financial deepening of the economy, the total demand for money is projected to rise by around 12-13% p.a. during the 1990s. The expansion of domestic credit will have to be slightly slower, to allow for the projected increase in net foreign assets. As regards the allocation of credit, it will be important to sustain the real growth of private sector credit at 7-8% p.a., while also providing scope for public enterprises to shift part of their financing from the Budget to the banking system. The Government will therefore need to use some of the increase in oil/LNG revenues during the 1990s to build up its domestic assets. The levels of government investment indicated in Table 2.8 are based on this credit allocation strategy. Table 2.9: ILLUSTRATIVE MONETARY PROJECTIONS, 1990/91-2000/01 (% p.a.) Actual Projected 1985/86-1987/88 1990/91-2000/01 Inflation3 and interest rate International inflation (MUV) 7 4 Domestic inflation (CPI) 9 5 International interest rate (LIBOR) 7-9 6-8 Domestic interest rate (6 month deposit) 14-16 10-12 Money and credit growth rates Nominal money (M2) 17 12-13 Real money 8 7-8 Domestic credit 21 11-12 Real public enterprise credit 1 3-4 Real private sector credit 7 7-8 Source: Bank Indonesia and World Bank staff estimates. - 31 - 2.31 As already noted, international interest rates (represented by LIBOR) are projected to be in the range of 6-8% over the medium term. Given Indonesia's open capital account, domestic interest rates will follow international interest rates, with a upremium" for perceived exchange risk. The Government'n primary objective of monetary policy is to control inflation, so as to maintain the competitiveness of the exchange rate. This in turn will support the projected adjustment in the balance of payments and improve the market perception of the value of the Rupiah. As a result, it should be possible to reduce domestic interest rates over the medium term. Nevertheless, real Interest rates will remain significantly positive to promote financial deepening and resource mobilization. The Balance of Pavments 2.32 Indonesia's medium-term prospects are closely tied to developments in the balance of payments (see Table 2.10) Some recovery in oil prices, a remarkable surge in non-oil export earnings, and continued prudent macroeconomic management have allowed Indonesia to cut back the current account deficit from US$4.2 billion (6.2% of GNP) in 1986/87 to about US$2.0 billion (3.1% of GNP) in 1987/88. Further efforts will be required to reduce the current account deficit over the next two to three years, in response to uncertainties in world oil and currency markets, and the large overhang of external debt. Accordingly, in Table 2.10, the current account deficit is projected to decline to US$1.9 billion (2.7% of GNP) in 1988/89, US$1.7 billion (2.2% of GNP) in 1989/90 and US$1.4 billion (1.6% of GNP) in 1990/91. At the same time, rising non-oil export earnings are projected to finance a steady increase in imports, adequate to support the 4.5% p.a. growth rate in non-oil GDP over the next two years. During the 1990s, the balance of payments constraint is expected to ease, based on a sustained non-oil export effort and the expected improvement in the terms of trade. As a result, it should be possible to maintain the current account deficit at a manageable level (less than 1% of GNP), while restoring growth in non-oil GDP to an average of 5-6% p.a. 2.33 Thus, with regard to the balance of payments, Indonesia's main challenge is to sustain a real growth of non-oil exports of at least 6% p.a. To achieve this growth rate, given the likelihood of market constraints on many traditional exports (e.g., textiles, some primary products), Indonesia will have to be competitive over a wide range of industries in order to diversify its export base. As argued in Chapter 3, the prospects for non-oil exports are promising. Although there is a danger of growing protectionism in developed countries, Indonesia is starting from a low market share for many products and has ample scope to penetrate the large export market. Elements such as low labor costs, abundant natural resources, and a maturing industrial sector give Indonesia a potential competitive edge in many internationally traded comnodities. The recent policy measures -- active exchange rate management and the series of trade and industrial reforms -- have further strengthened Indonesia's international competitiveness, as reflected in the strong performance of non-oil exports in recent months. This momentum must be sustained during the coming years. A key policy ingredient will be a competitive exchange rate, requiring flexibility in nominal exchange rates and - 32 - Table 2.10: BAIANCE OF PAYMENTS, 1987/88-2000/01 (US$ billion at current prices) Eatimate Projections 1987/88 1988/89 1989/90 1990/91 1995/96 2000/01 Merchandise exports (fob) 17.9 19.3 21.1 23.1 38.7 60.1 - Oil & LNG (8.5) (8.2) (8.6) (9.1) (14.3) (17.2) - Non-oil (9.4) (11.1) (12.5) (14.0) (24.4) (42.9) Nerchandise imports (eif) -14.1 -15.1 -16.3 -17.7 -29.8 -49.1 - Oil & LNG (-2.5) (-2.5) (-2.7) (-2.8) (-3.6) (-6.4) - Non-oil (-11.6) (-12.6) (-13.6) (-14.9) (-26.2) (-42.7) Trade balance IA AA 4A 5LA Li II. Net non-factor services -1.5 -1.5 -1.6 -1.6 -2.2 -2.3 Resource balance 2LA Li L2 Net factor services & transfers -4.3 -4.6 -4.9 -5.2 -7.3 -9.4 Current account balance -2.Q -1.9 -1.7 --. LA -°*7 of which: - Oil & LNG 3.7 3.5 3.4 3.7 6.4 5.2 - Non-oil -5.7 -5.4 -5.1 -5.1 -7.0 -5.9 Net public MLT loans La 2.4 1.9 1.6 1.4 0.8 1.2 - Disbursements Z (6.3) (6.4) (6.3) (6.0) (5.6) (6.6) - Amortization (-3.9) (-4.5) (-4.7) (-4.6) (-4.8) (-5.4) Net other capital J& 0.8 0.7 0.7 0.7 1.2 2.6 Use of net foreign assets -1.2 -0.7 -0.6 -0.7 -1.4 -3.1 Memoitems: Special assistance 1.4 2.4 1.5 0.7 - - Net official reserves Ld 5.6 6.7 7.3 8.2 13.7 22.9 - Months of imports 4.4 5.0 5.0 5.0 5.0 5.0 Total net foreign assets 4t 10.8 11.4 12.0 12.7 16.7 27.5 Current account/GNP (%) -3.1 -2.7 -2.2 -1.6 -0.4 -0.3 LS Includes credits for LNG expansion, LPG and paraxylene projects. Zk Includes special assistance, in the form of fast-disbursing program aid and local-cost financing (see memo item). La Includes direct foreign investment, oil/LNG exports credits, all private capita flows, valuation adjustments, and errors and omissions. t. Net of outstanding drawings from IMF's Buffer Stock and Compensatory Financing Facilities. IS Of the banking system (Bank Indonesia and comercial banks). Source: World Bank staff estimates. - 33 v appropriate fiscal and monetary pollcies to control domestic inflation. Furthermore, the effort to the reduce costs of production through appropriate deregulation measures will also have to be maintained. The various policy issues in this area are discussed ln Chapter 4. 2.34 The growth of imports will be restrained over the next few years, reflecting the effect of continued cutbacks in budget-financed capital expenditures (see Table 2.11). However, private demand for imports is expected to increase steadily, in response to the recent trade reforms and to support investment in export-oriented activities. Over the medium term, both intermediate and capital imports will pick up as economic growth and domestic investment (including public investment) gain momentum. The growth of real capital imports will initially surge to 7% p.a. during the first half of the next decade, responding to the need for a recovery in investment activity from the depressed levels of the late 1980s. In the second half of the 1990s, the expansion of capital imports is projected to slow down, as investment growth returns to a trend level and improvements are achieved in the productivity of capital. But intermediate imports will need to continue growing at 6-7% p.a. throughout the decade, to provide the necessary inputs for sustained economic growth and expansion of non-oil exports. Table 21.1: MERCHANDISE IMPORTS, 1987/88-2000/01 Value at current prices Real growth rates (USS billion) (a n.a.) Estimate Projected 1987/88- 1989/90- 1995/96- 1987/88 1989/90 1995/96 2000/01 1989/90 1995/96 2000/01 oilzm~~L L fLA 2L2 Non-oil 11.6 iL 2b.2 4 Z2 4. 12 6 Consumer goods 1.2 1.4 3.2 4.5 2.1 8.3 3.0 Intermediate goods 4.7 5.6 10.4 18.0 5.9 6.8 7.2 Capital goods 5.7 6.6 12.6 20.2 4.8 7.2 5.8 Total 14.1 16i.3. 29. ALl 4_L LI Li Source: World Bank staff estimates. 2.35 The implications of these balance of payments projections for external financing requirements and external debt management are discussed in Chapter 3 below. In brlef, Indonesia will continue to require untied concessional asslstance in order to finance the current account deficits for the next two years. For the medium term, rather conservative estimates are uwed of external borrowing capacity and reserve requirements, to provide flexibility to respond -34 - to external shocks without unduly disrupting economic growth. As a result, given the projected growth in non-oil exports, the total debt service ratio declines from a peak of nearly 40% in 1988 to 220 in 1995 and to 15% by the end of the 1990s. Similarly, net official reserves are held at five months of imports throughout the projection period. In response to short-term pressures on the balance of payments, somewhat higher levels of external borrowing and reserve use could be envisaged. But with a prolonged and severe deterioration in the external environment, additional measures would also be required to iWprove incentives for non-oil export development and domestic resource mobilization. - 35 - CHA=1 3 MOBILIZING FOREIGN ECCHANGE AND) PUBLIC RESOURCES A. Itroductio 3.01 The recent decline in oil revenues adversely affected the balance of payments and the Government's Budget. In the short term, the resource shortfalls have been overcome by tight restraint on budget spending and import demand, as well as special external assistance from IGGI members. However, the long-term loss of oil revenues reemphasizes the importance of mobilizing resources from the non-oil economy. For the balance of payments, this is reflected in the high priority now being given to non-oil exports. And, for the Budget, efforts are underway to boost non-oil revenues through better tax administration. Future prospects and policy priorities for non-oil export development are reviewed in Section B and for public resource mobilization in Section C. Section D then outlines an appropriate external borrowing strategy, to supplement the availability of development resources, while maintaining a manageable debt burden. B. Non-oil Exnort Develooment 3.02 Recognizing that oil prices are unlikely to increase in the near term, the Government has placed particular emphasis on the promotion of non-oil exports. As reviewed in Chapter 1, this has resulted in a number of timely and substantive policy adjustments that have created a more supportive environment for exports. Of particular importance has been the maintenance of an appropriate real exchange rate and the series of regulatory reforms begun in 1986. As a result, it is anticipated that an average real growth rate of about 11% p.a. for non-oil exports should be attainable over the next two years. While agriculture and minerals/metals exports are expected to continue to expand, most of the increment (about 70%) in earnings derives from manufactured goods. Consequently, by this year, manufactured goods should for the first time account for more than 50% of total non-oil exports.a 3.03 Over the longer term, given further improvements in the domestic policy environment, total non-oil exports should settle at a strong average growth rate of 6-7% p.a. This growth will be supported by returns on the past heavy investment in primary commodities (e.g., palm oil and rubber) as well as the steady expansion of the minerals and metals sector (e.g., aluminum, copper and bauxite). But manufactured goods are anticipated to continue to set the pace. Given the anticipated slowdown in the growth of the two largest manufacturing g To put this in pearspective, manufactured goods accounted for only 22% of non-oil exports in 1982/83, and total non-oil exports have grown at an average rate of over 15% p.a. between 1982/83 and 1987/88. - 36 - subsectors -- textiles and plywood -- the future growth of manufactured exports will depend on a more diversified set of products than in the past. Indonesia's share of the world market for these "other" products is small, hence it is possible for manufacturers that are competitive to expand output by capturing a larger share of the global market. In this sense, developments in the international economy are not crucial. As the estimated 40% real growth in manufactured exports in 1987/88 illustrates LI, it is domestic policies that are the key to export performance. In addition, sustained export growth will Table 3.1: NON-OIL MERCHANDISE EXPORTS, 1987/88-2000/01 Value at current prices Real growth rates (USS million) (% u.a.) Estimate , Projected 1987/87- 1989/90- 1987/88 1989/90 1995/96 2000/01 1989/90 2000/01 commoditiesL 3.883 4.675 9.360 14.865 4.4 5,3 Timber products 562 650 1,060 1,495 3.5 2.7 Rubber 935 1,030 2,010 2,990 3.5 4.0 Coffee 533 670 1,335 1,885 3.0 3.0 Palm oil 172 260 875 1,720 9.0 10.0 Tea 105 140 350 575 5.5 6.0 Shrimp 422 505 900 1,470 6.0 6.0 Rattan 158 220 625 1,125 6.0 6.0 Others 997 1,200 2,205 3,605 3.8 6.1 Minerals & metals 1Q003 1.125 2.185 3.255 LA 4.5 Tin 166 225 480 695 9.7 3.7 Cold 226 275 420 510 6.7 1.8 Aluminum 307 305 635 1,035 2.0 5.7 Copper 205 200 440 720 5.6 6.0 Nickel (total) 64 80 130 150 16.2 5.0 Others 35 40 80 145 11.6 7.1 Manufactured pQods 4.486 6.710 ,12.835 24.740 1L.9 LA ' Textiles 1,107 1,320 2,100 3,120 5.7 4.0 Plywood/panel products 1,88 2,250 3,775 5,730 5.0 2.6 Others 1,493 3,140 6,960 14,555 37.2 11.2 Total non-oil gxuorts 9.371 12.510 24.380 42.860 1.9 LI Source: World Bank staff estimates. Ll Excluding textlles and plywood, "other" manufactured goods are estimated to have grown by 74% ln real terms in 1987/88 (see Annex 1). - 37 - require substantial investment In new export capacity. Although much of the recent expansion in non-oil exports has come from existing capacity, underutillzed due to the depressed levels of domestic demand, there are *ncouraging signs that export-oriented investments are on the rise. This trend can be expected to continue, provided: (a) export incentives are maintained; (b) further progress is made on removing trade barriers and simplifying domestic regulations; (c) the financial sector is able to respond to the needs of exporters for credit and equity; (d) appropriate institutional support is developed to ease accoss to export markets; and (e) management of resource leases for industries such as plywood is improved to ensure a sustainable supply of raw material. Under these conditions, and given the projected trend in world prices, it should be possible to double non-oil export earnings by the mid- 1990s. Agricultural Commodities 3.04 To attain the targeted growth in non-oil exports, Indonesia will have to continue to exploit the clear comparative advantage it has in many agricultural commodities. Although their share of total non-oil exports is expected to decline (from about 41% in 1987/88 to 358 in 2000/01), strong growth is crucial not only for generating foreign exchange but, more importantly, for providing employment and income earning opportunities for the large and relatively poor rural workforce. Many agricultural commodity exports are relatively labor and land intensive (e.g., smallholder rubber or tea) which, given the low cost of labor and availability of land (off-Java), provides Indonesia with its potential comparative advantage. To take full advantage of this opportunity, in addition to an appropriate macroeconomic environment, specific policy measures -- such as institutional/incentive reforms for tree crops -- will be required. Such policies will attract private investment into the sector and increase returns from existing public sector investment. In particular, it is important that the drive to increase the value added of Indonesia's exports by encouraging domestic processing does not lead policymakers to discriminate excessively against raw material producers (e.g., raw rattan, rubber and hide producers). Provided the policy environment is adjusted to support the growing diversity and maturity of the agriculture sector, total agricultural exports should grow at an average annual rate of about 5% over the medium term. 3.05 Due to the large investments made over the last decade, Indonesia's production and exports of tree crops are expected to expand at an average rate of about 58 p.a. In the case of rubber, the 5% p.a. output growth achieved over the period 1982-87 is expected to slow to 3-48 p.a., slightly above the growth in world demand. Although Indonesia is already the second largest producer and exporter of rubber, accounting for close to a third of world trade, relatively low domestic production costs should enable it to capture a growing share of the world market. However, this will require that export restrictions are kept to a minimum (e.g., free of quotas or taxes) and that a sustained effort is made to raise yields, reduce processing losses, and improve quality. Rubber prices are expected to remain at or below their current levels until 1990, when they should begln to recover as oil prices (and hence synthetic rubber prices) rise. Accordingly, export earnings will increase modestly in the short run but more - 38 - rapidly In the longer run as both volumes and prices increase. For palm oil, Indonesia's large planting program should support an annual growth rate of 9-10% over the next decade, making it one of the main primary commodity exports. As in the case of rubber, Indonesia is a relatively low cost producer and therefore could capture a growing market share. To achieve this goal, efficiency improvements need to be made in the large public estates, and the private sector should be allowed to expand, unimpeded by export taxes and domestic quota restrictions. In addition, pressure should be brought to bear in appropriate international fora to persuade consuming countries to keep their markets open to palm oil exports. Coffee exports should also register a steady 3% p.a. average growth over the next decade. Although volume growth in the near term will continue to be constrained by the International Coffee Agreement (ICA), over half of Indonesia's coffee is now sold in non-ICA quota markets. Given that Indonesia is a competitive producer and its small share in world trade of coffee (approximately 4-58), growth will depend primarily on improving quality and securing new market outlets. The anticipated strengthening in coffee prices should translate this volume growth into a substantial value increase, as shown in Table 3.1. 3.06 Shrimp and, with less certainty, processed and semi-processed rattan should also become important exports during the next decade. Production of shrimp stagnated in the early part of the 1980s as the industry restructured. However, as the estimated 25% increase in output for 1987/88 indicates, prospects for the future are good. Indonesia is close to many large consumer markets (particularly Japan), and the more open policy towards foreign investors/advisors should make it possible to achieve the quality and reliability improvements required. The future prospects of semi-processed rattan is less certain. Although world demand is strong and Indonesia supplies over 70% of the international market, domestic policies designed to increase the domestic processing of rattan exports could reduce export earnings in the near future. While a move towards more processed rattan products (e.g., furniture) may be desirable, government policy should not force the pace through export bans or quota arrangements. Transport costs coupled with the current scarcity of skilled manpower and marketing contacts, suggest that it will take time to penetrate the finished product market. Indonesia's large share of the world market and resource depletion concerns may provide a rationale for an export tax. However, export bans and/or licensing restrictions are inflexible policy instruments with which to achieve these objectives, and are likely to impose significant short-term economic costs, particularly on rattan growers and harvestors in the rural areas. 3.07 The production of other agricultural commodities has expanded rapidly (up an estimated 34% in 1987/88). Growth of some of these products, such as tapioca, is expected to slow. However, marine products (excluding shrimp) show strong promise, as do cocoa, pepper, vanilla, and cassia vera. This reflects the growing diversity of Indonesia's agricultural sector and the benefits to be derived from creating stronger links with world markets. To build upon this success, policymakers need to reduce the crop specific bias in the incentive structure (including subsidies and output targets), and focus public investments on research and development to improve crop quality/variety, and infrastructure to bring produce quickly and cheaply to market. - 39 - Metals and Minerals 3.08 Metals and minerals will continue to provide a small but significant share of total non-oil exports. Indonesia has substantial reserves of mineral resources, and is generally a low cost producer. However, global over-capacity and large stocks are likely to continue to hold international prices at current relatively low levels in the near term. For example, following the restructuring of the state-owned tin producer, costs have been cut dramatically and the company is able to export profitably even at today's low prices. However, full capacity utilization of the plant is constrained by the international agreement to restrain output so as to reduce the overhang of tin stocks. In the case of nickel, output should grow in the short term once repairs to the large ferro-nickel plant have been completed. Indonesia's cost competitiveness will allow for future volume growth, particularly as the Japanese phase out their costly energy-intensive nickel ingot industry. 3.09 The aluminum industry has strong potential for growth. A restructuring of the industry's capital base has reduced costs, allowing it to take full advantage of the recent price rise. Even if swing producers reenter the market, the current low level of world stocks may support prices over the next couple of years. In the longer term, the planned expansion in plant capacity (to be completed in 1992) will result in significant volume gains. Gold exports are projected to continue to expand rapidly over the next year or two, but then level off once a sustainable level of domestic supply is reached. Exports jumped to 14.5 tons in 1987 (1.3 tons in 1986) following the removal of the export ban in late 1986. It is anticipated that the industry will attain a level of about 20-25 tons by the mid-1990s. Lastly, both bauxite and steel exports should also continue to bolster the growth of the sector. The steel industry is competitive in some product lines, and the planned plant expansion over the next few years will provide the necessary capacity for increased volumes. However, further measures will need to be taken to lower costs and increase competitiveness. Manufactured Goods 3.10 As mentioned above, about 70% of the increment in non-oil exports over the next two years is anticipated to derive from manufactured goods. The devaluation in September 1986 and the series of trade and industrial policy reforms have greatly improved incentives for manufactured exports. As the recent growth performance illustrates, Indonesian manufactures can compete across a wide range of products in the world market. But to do so they need access to competitively priced inputs -- including domestically produced goods -- and a supportive and transparent regulatory framework. In the longer term, as the phenomenal growth in textiles and plywoods begins to slow, the driving force of manufactured exports will used to come from a range of non-traditional manufactures, aggregated together in Table 3.1 as *other" manufactured goods. The diversity of products in this group, coupled with rapidly changing market demands, suggest that the Government's approach of broad policy deregulation is appropriate. As the manufacturing sector matures further, the challenge for policymakers will be to identify those areas where they can play a useful supportive role and where more responsibility can be devolved to the private sector. - 40 - 3.11 Textiles/clothing and plywood/panel products are estimated to account for about 24% and 42% respectively of total manufactured exports in 1987/88. Plywood exports have Increased dramatically since 1980, with Indonesia now supplying 80% of world demand. Many of the higher cost producers in Asia have ceased production. Future international demand, particularly from Japan, is likely to be strong, which will support higher prices. Output and export growth is expected to come from increased efficiency in existing logging sites/plywood factories, and some product diversification toward other panel products. To ensure that the higher level of exports is sustainable, it will be necessary to improve management of Indonesia's forests and reduce output growth over the longer term. Textile/garment exports should also continue to expand, albeit at a slower pace of 5-6% p.a. The renegotiation of the U.S. textile agreement with Indonesia limits overall volume growth to 6% p.a. While this is a lower rate of increase than in the past, the ceiling will still allow Indonesia to expand its exports to this important market through volume increases and a larger share of higher value-added items. Other markets (including non-quota markets) are also becoming increasingly important, and Indonesia is well placed to take advantage of these. The appreciation of other countries' currencies (e.g., Republic of Korea), make Indonesia a low cost producer and the more open policy towards foreign investment should attract foreign companies. However, to exploit this opportunity, existing producers will have to upgrade their production lines. In addition, the Government can play a useful supportive role by improving the mechanism by which export quotas are allocated, expediting export documentation, and providing information on international markets. 3.12 'Other' manufactured goods are anticipated to continue to be the strongest performing non-oil export: group, growing by about 35% p.a. over the nest two years before slowing to a longer term average growth rate of around 10% p.a. Near-term growth will be supported by both increased capacity utilization and new investment. As the data on private investment and capital goods imports for 1987/88 indicate, manufacturers have already begun to take advantage of the more attractive investment climate within Indonesia. And. as much of this new investment is in short-gestation export oriented activities, continued strong growth over the next two years should be attainable. In the longer term, much will depend on taking the domestic policy actions required to build upon this success. Appropriate macroeconomic policy will continue to be essential if the basic conditions for export growth are to be maintained. These policies will be particularly important in maintaining the competitive advantage Indonesia enjoys due to its comparatively low wage rates within the region. But macroeconomic policies by themselves will not be enough to attain the projected growth rate. As discussed in Chapter 4, supportive trade and industry reforms will be necessary to promote efficiency and encourage the process of structural change. At the same time, public sector investment will be necessary to provide the required physical infrastructure and development of human resources to support a more competitive industrial structure. Finally, the longer term expansion of manufactured exports will require a substantial level of new investment by the private sector. This will entail taking steps to increase the efficiency and responsiveness of the domestic financial sector. - 41 - C. MPbic Resource Nobilizati 3.13 The decline in oil prices since 1982 has severely limited the availability of budgetary revenues. The Government has responded to this situation by implementing a major tax reform, aimed at improving the efficiency of the tax system and boosting revenues. Thus, non-oil taxes have surged from 6.3% of GDP in 1983/84 to 8.6% in 1987/88.a However, the non-oil tax effort is still significantly below those in comparable Asian countries 1Z. With a strong drive to improve tax administration, it should be possible to increase non-oil tax revenues to 12% of GDP by the did-1990s. While better revenue performance of non-oil taxes will remain a central element of the public resource mobilization strategy, a broader effort aimed at improving the finances of state enterprises and achieving gree'ter cost recovery from public services will have to be implemented. Greater cost recovery will induce more efficient use and will improve the quality of service, by helping finance more adequate levels of Oz. Non-Oil Tax Effort 3.14 Although the tax laws provide ample flexibility to increase tax rates and/or broaden the tax base, the Government has recognised that the immediate priority is to improve tax administration. Accordingly, the tax. strategy has focussed on implementing policies to increase tax compliance. One aspect of this has been the effort to expand the number of registered taxpayers. Following the lapse in the tax amnesty, designed to induce people to register voluntarily, a tax-registracion checking campaign was launched in August 1986. The campaign sought to identify non-registered and non-filing income taxpayers by collecting information from alternative sources (e.g., telephone directories, business permits), and then initiating the tax registration/filing process. Some progress was also made in the area of tax audits. These efforts have led to an increase in tax compliance, as reflected in the expansion of the number of registered taxpayers and improvements in tax filing ratios (see Table 3.2). Nevertheless, the number of taxpayers is still substantially below potential and overall filing ratios could be improved. Moreover, tax compliance for the VAT varies widely among sectors, with filing ratios of 67% for the industrial sector compared to only 32% for the construction sector.Zl Q, Including local government tax revenues. LZ For example, non-oil taxes in the early 1980s were between 10-19% of GDP for a sample of countries including India, Pakistan, Philippines, Thailand, Korea and Malaysia. il Low tax compliance for the construction sector reflects the administrative difficulties of extending the tax coverage to a large number of small contractors. - 42 - I A 3tl2: TAX COMPLIANCE INDICATORS, 1984-1987 lA Nuber of reffigtered taxpaYr (00) Filina ratios /b 1983 1985 1986 1987 1986 1987 Personal income tax i; 327.5 554.3 643.0 672.4 60.0 64.0 Corporate income tax 83.6 133.4 157.6 176.1 41.2 43.8 Value-added tax (VAT) 25.1 69.9 79.4 41.6 45.3 Ja End of year figures except for VAT. For 1987, only September figures were available. Lk Ratio of filed returns to number of registered taxpayers. Ls~ Excludes personal income taxpayers on whose behalf personal income tax was withheld and the wirhholding represented the final tax liability. Source: Ministry of Finance. 3.15 The Government also took steps to improve the institutional capacity to undertake systematic and efficient audits. The effort focussed on training specialized auditors and developing a comprehensive audit selection system. Through local training in district offices, the number of income tax auditors increased from 1,268 in 1986 to 2,850 in 1987. Furthermore, 600 income tax and 200 VAT auditors received upgraded training during 1987. An additional 750 auditors (600 for the income tax and 150 for VAT) will receive higher level training during 1988. To further strengthen the audit process, a comprehensive audit selection system was developed recently.Ll The new audit selection system would ensure complete objectivity in the selection process while also indicating the revenue potential of specific audits (thus allowing even better selectivity). For 1988, some 13,000, 25,000 and 34,000 audits for corporate, VAT and personal income taxes respectively are planned based on this new audit selection process. The program is expected to generate around Rp. 400 billion in additional revenues during 1988/89. 3.16 In the area of property taxation, there is an ongoing effort to improve the property valuation system. Although the new property tax (PBB) stipulated that assessment was to be based on market values of land and buildings, valuation has continued to be determined as under the old system (IFEDA). On average, these assessed values have been found to be about one fourth of market values, with a wide dispersion of effective tax rates. As a first step towards improved valuation, a program has been initiated to revalue urban properties as well as improve the mass appraisal index system. The first stage of the program, covering a three-year period (1987-89), comprises about 10,000 ]1 With the help of IRS experts from the United States. - 43 - indlvldual valuatlons in Jakarta, Bandung and Medan, semi-lndividual valuation for another 50,000 properties ln Jakarta, and the upgrading of the index assessment covering urban properties throughout Indonesla. This valuation effort will be carried out by foreign firms in conjunction wlth counterpart iocal firms, as well as individual expatriate and local valuers. The program also includes a wide range of training activities, including in-house block courses, in-service training and overseas training. 3.17 The Government is also trying to tackle weaknesses in the tax collection and payments control system. Except for a few dlstrict offices, an effective collection program does not exist currently. For example, no effective action has been taken to reduce the large number of tax arrears, there are long de±ays between the issuance of an audit report and the mailing of an assessment notice, and collection ratios are very low (only 60% of current assessment) with high average collection costs (20% of revenue collection). To redress these problems, a new payment control system (NPCS) has been devised./l All lncoming transaction documents of a district office (tax returns, assessment notices, payment documents, etc.) will be computerized on a daily basis. The system will then maintain up-to-date individual taxpayer accounts which will provide the basis for active collection measures. The system has already been implemented on a pilot basis in tuze Jakarta Selatan II district office and will be extended to several other Jakarta district offices durlng 1988. This will be followed, in 1989, by a gradual cen_ralization of payment control activities for all of Jakarta at a special office (NPCS). 3.18 Undoubtedly, the initiatives taken so far, if implemented well, can be expected to substantially boost non-oil taxes over the next few years. A special effort will be needed to improve the implementation of the various programs. A general problem seems to be that administrative resources are not effectively used, causing wastage of financial and manpower resources. One solution would be to consider taxpayers who have failed to file tax returns with positive liability during two consecutive years as non-effective and suspend their accounts from the local masterfiles, allowing district offices to focus their attention more closely on the active taxpayers. Another source of inefficiency is the lack of follow-up on the "checking" program. Adequate administrative controls over the national "checking" program will need to be established and actively pursued by headquarter and regional offices to ensure effective implementation of the program. 3.19 The revenue potential of tax audits is apparent even from the limited experience so far, and the Government's emphasis on increasing the institutional capacity to undertake systematic and efficient audits is appropriate. To implement the proposed program, it is essential to ensure that adequate budgetary support is provided, especially to finance training on a long-term basis. Furthermore, it is important to ensure that trained auditors are fully jJ With the assistance of technical experts from the Federal Republic of Germany. . 44 - utilLzed. Currently, as a result of the rotation policy, about 20% of the existing income tax auditors are assigned to non-audit Jobs. There is a need to avoid this Inefficient use of skills by ensuring that the mandatory 3-4 year rotation policy is limited to tax officials engaged ln similar functional duties. 3.20 The success of the payment control system and efforts to retrieve tax arrears hinge upon an effective application of the enforcement measures provided in the tax laws for non-compliance (e.g., administrative fines, penaltias, seizure of taxpayers' property and sealing of premises). So far, only administrative fines have been assessed on a routine basis and even this has been done inefficiently. For example, a sigulficant part of estimated tax arrears can be attributed to non-effective taxpayers; the administrative burden of assessing the fine and sending collection notices and distress warrants would seem to outweigh the remote possibility of retrieving these arrears. The proposal to remove the non-effective taxpayers from the local masterfiles will help resolve this problem. The Government may also need to make more use of the other legal sanctions, to discourage non-compliance. 3.21 Two other issues which merit serious attention are: the reorganization of the Directorate General of Taxation along functional lines, and the improvement of the Management Reporting System. By separating operations, support and evaluation functions, the proposed functional reorganization wouid clearly define areas of management responsibility, enhance the expertise of both the employees and their managers in their trained areas, and greatly simplify coumunications. The reorganization has been under consideration for some time, and specific proposals have been submitted. The Gernsnt will need to implement this soon, as it will have a significant long-term effect on the efficiency of tax administration. A study of the information and reporting system in the Directorate General of Taxation has recently been completed by the IRS tax team. The findings strongly indicate the need for an integrated management information reporting system. The IRS study outlines specific recommendations to improve the existing reporting system: streamline and reduce duplication, eliminate unnecessary r'iporting requirements, clarify data needs, identify key performance indicators for each activity, and automate reporting processes. Effective impltmentation of such proposals would greatly enhance overall tax administration. 3.22 While improvements in tax administration will be of central importance for mobilizing non-oil tax revenues, there may also be a need to consider selective increases in the tax base and rates over the medium term. This will be especially important to counter a further long-term decline in oil prices. The Government is already considering some actions to enhance the tax base, such as the taxation of interest income and extending the VAT to selected services. Although the revenue impact of these measures will be relatively small, they are designed to make minimum additional demand on tax administration. Following satisfactory progress in improving tax administration, the Government may then consider more comprehensive steps such as extending the VAT base to the retail level. This measure, if implemented in 1990/91, i8 estimated to generate additional revenues of 1% of GDP by 1995/96. Another option is to increase the effective tax rate for PBB. Currently, the tax ls a flat rate of 0.5% on 20% of - 45 - the officially assessed value of the property, iuplying an effective rate of only 0.1%. Even with proper valuation and improved tax administration, the revenue yield of property taxes will be much below potential. For example, by increasing the effective tax rate from 0.1% now to only 0.5% in 1990/91, additional revenues of 1 of GDP could be obtained by 1995/96. COS Recover 3.23 Over the last decade, the Government has embarked upon a large expansion of publicly provided services, notably in agriculture (irrigation and fertilizer distribution), utilities (electricity and water), transport (railways, roads and highways) and social services (education and health). These programs have brought important benefits to a large section of the population. However, most services were largely financed from,budgetary revenues with beneficiaries paying a relatively small share of the cost, raising concerns about efficiency of use. More importantly, the provision and efficiency of many of these services Is now threatened by scarcity of resources, indicating the need to review options for greater cost recovery, and better prioritization of services. The appropriate level of user charges in a sector will be influenced by a number of factors, including the extent of informal user fees already levied, the "public goods" character of the particular services, the ease with which collection can be implemented, the revenue potential, and the income profile of users. It is important that user fees are associated with improved services to beneficiaries, to facilitate public acceptance and compliance. 3.24 Electricity gricing. Appropriate electricity pricing is essential to finance the required expansion of electricity services and to promote efficient electricity use through conservation and substitution. Power tariffs in Indonesia were last adjusted in March 1984. Since then, the financial performance of the electricity authority (PLN) has been adversely affected by higher import costs, general inflation and the increased use of oil-fired generation. As a result, PLN's rate of return on revalued assets in 1987/88 is estimated to be only 2% on Java and negative off Java. Average power tariffs in Indonesia are now lower than for other countries in the Region a2 and also below the long-run marginal cost (LRMC) of electricity supply.LZ Therefore, there is a strong case for considering an increase in power tariffs. jI The average electricity rate for PLN is about 5.7 US cents/kWh compared to 7-8 US cents/kWh in Singapore (PUB), the Philippines (HERALLO), Thailand (MEA/PEA), Malaysia (NEB), Taiwan (TAIPOLER) and Korea (KEPCO). The long- run marginal cost for PLN is estimated to be about 6.5 US cents/kWh in economic terms (and higher in financial terms). i The current level of electricity tariff is close to or above LRMC for commercial and large industrial consumers but below LREC for small residential and small industrial consumers. - 46 - 3.25 In setting power tariffs, a number of factors have to be taken into account. First, in order to promote efficlent use and ensure that PLN operates as a commorcial entity, the average tariff will need to be set at a level which covers LRHI of supply and also allows PLN to earn an adequate rate of return on assets. Second, to avoid uneconomic increases in tariffs, it will be inportant to take appropriate actions to improve PLN's operating efficiency. Third, if social considerations (e.g., rural electrification) require subtantial departure from marginal-cost pricing, then PLN will need to be compensated (through budgetary subsidies) to protect its financial viability and to make explicit the financial cost of such programs. Finally, tariff increases have often been resisted because of a presumed adverse impact on consumers, particularly in poorer income groups. But, in practice, most households spend only a small proportion of their total outlay on electricity. Moreover, since only 15% of households have access to electricity, even the smallest consumer is unlikely to belong to the poorest socio-economic group in society. For industrial users, the competitiveness of exporters can be better maintained through appropriate macroeconomic and structural policies rather than by subsidizing electricity use. Even if affordability remains a major concern, this can be built into the tariff structure by providing smaller increases for low income and high priority consumers and larger increases for other users. In this regard, care has to be taken to ensure that differential tariffs do not excessively distort the pattern of electricity consumption. 3.26 Fertilizer and gesticide subsidies. During the last two decades, Indonesia has encouraged the development of its agricultural sector by providing a broad program of support for most agricultural inputs, including subsidized fertilizer and pesticides. This has entailed providing fertilizer and pesticides at below world prices, maintaining a pan-territorial pricing system, and enforcing a uniform price for all fertilizer types. Despite recent domestic price increases, the budgetary costs of the fertilizer and pesticide subsidies are estimated to be about Rp. 0.6 billion and Rp. 0.2 billion respectively in 1987/88./L 3.27 In the case of fertilizers, approximately one third of the subsidy is accounted for by the high production cost of domestic plants (with the remaining two thirds used to offset distribution costs and subsidize farmers).za At the plant level, only 15% of the subsidy is attributable to the domestic production of urea, whereas triple superphosphate (TSP) and ammonium sulphate (AS) account for 54% and 30% of the subsidy respectively. This reflects the relatively efficient domestic production of urea, which accounts for about 60% of the total fertilizer tonnage used by farmers. If the two high cost urea plants underwent a capital restructuring and implemented cost saving investments, domestically LI In October 1987, the official retail price of fertilizer was raised by 8% (from Rp.125/kg to Rp.135/kg) and of pesticides by an average of 808. The budgetary cost in 1987/88 excludes Rp. 0.4 billion of arrears accumulation. Z2 Based on calculations for 1986/87. - 47 - produced urea could be sold profitably on the domestic market at export parity levels without a subsidy. In the case of TSP and AS, average domestic production costs exceed international prices. Indeed, during the first half of 1987, the cost of imported raw materials used by domestic manufacturers was higher than the cost of the imported finished product. While the recent rise in the world TSP price has brought tlhe landed price close to Gresik's production costs, it is unlikely that the same will occur for AS. The Government is aware of this problem and is considering restructuring investments designed to lower domestic production costs of these fertilizers. To contain the subsidy and minimize price distortions, it is recousended that TSP and AS be sold ex-factory at the prevailing import parity price, allowing manufacturers to decide when it is less costly to manufacture domestically as opposed to importing the finished product. 3.28 Fertilizer distribution costs are high by international standards, even after adjustments for Indonesia's unique topography, thereby contributing substantially to the fertilizer subsidy bill. Significant savings can be achieved by optimizing the system of local supply and export allocations to take advantage of locational advantages. It would also be possible to reduce this component of the subsidy further by divesting PUSRI of its responsibility for distribution beyond the wholesale level, thereby allowing some flexibility in retail prices to reflect transport costs. 3.29 At the farm level, there is a strong case for increasing the overall price of fertilizer, and an even stronger case for moving away from a uniform price for all fertilizer types. Average fertilizer application rates in Indonesia, estimated at 75 kg of nutrients per hectare in 1984, are above those in other comparable countries which indicates that farmers are well aware of the beneficial effects of using fertilizers. Also other purchased inputs, in particular labor, now account for a much larger proportion of production costs than fertilizer. As a result, an increase in the fertilizer price (i.e., urea price) is unlikely to result in a significant decline in output. Moreover, the recent 15-20% increase in the retail price of rice, from Rp. 380/kg to around Rp. 450/kg, has created an opportunity to increase the fertilizer price without adversely affecting farmers net income., The case for moving away from a uniform fertilizer price is even stronger. The farmgate subsidy on TSP is almost double that of urea, and yet the impact on crop yields -- particularly in the short term -- is probably less. While farmers may have to be encouraged to use a balanced mix of fertilizers, this does not justify current pricing policy. The maximum fiscal benefit could be achieved with the minimum impact on food production if TSP prices were increased by more than urea prices. LI For the uplands, the availability of subsidies also encourages farmers to apply relatively cheap fertilizers to increase yields rather than consider more expensivR but environmentally sound methods such as green manuring, mulching, an, ing compost to maintain soil fertility and stability. Fertilizer subsidies therefore often serve as a disincentive for upland farmers to face the full economic costs of soil erosion and to respond to sound land conservation measures. - 48-. 3.30 The economic returns to pesticide use, at current application levels, are approaching zero, with farmers paying less than 60% of the economic price. If environmental costs are also taken into account, the returns to the economy are probably negative. The recent ban on broad-spectrum pesticides -- which eradicated natural pest predators -- coupled with the campaign to provide integrated pest management (IPM) is an important step towards correcting the situation. However, maintenance of the pesticide subsidy at the current high rate will discourage traditional methods of eradicating pests and make the IPM program relatively less attractive. A complete withdrawal of the pesticide subsidy is likely to have negligible output effects, while having a positive impact on the environment, and saving US$20 million for other more productive agricultural support programs, such as research and extension. 3.31 Cost recovery in other sectors. In the roads sector, a significant increase in user charges paid by truckers is warranted, given the high wear and tear imposed by trucks on the road network, and the limited maintenance and rehabilitation costs borne by trucking firms through road user taxation. An essential component of any package aimed at achieving full cost recovery over time would be an increase in the price of fuel (diesel in particular) or the imposition of a special fuel levy. A second important component could consist of an increase in the annual license fee for trucks. Increase' O& funding from such taxes must be combined with policies to raise the Government's capacity to carrY out road maintenance, particularly in the regions. 3.32 In the irr gati sector, farmers are currently responsible for O&M on tertiary canals. Cost recovery for main and secondary canal maintenance has been indirect, through the levy of a land tax (formerly the IPEDA, now the PBB), which attempted to differentiate between farmers in irrigated and non-irrigated areas. However, the property tax is largely a general purpose tax and there is a need to have an irrigation service fee directly linked to O&M services. Recently, such a fee was successfully introduced in South Sulawesi, Bali and North Sumatra. Based on this experience, the Government has launched a pilot project to determine appropriate fee levels, the organizational arrangements needed for collection, and the criteria for such charges. As institutional arrangements for effective implementation are developed, the fee could be targetted to cover 100% of efficient O&f costs. 3.33 In hightr education, although tuition charges have been significantly increased in recent years at public universities, fees remain low (at approximately Rp. 240,000 p.a.) in absolute terms and cover only 20-30% of educational operating costs. There is, therefore, considerable scope for fee increases, particularly if the quality of education is to be improved. It is important, however, that any review of the present tuition policies leading to a fee increase include a careful assessment of the various special purpose fees currently levied, and explore the possibility of increased student access to government subsidized or guaranteed loans. Universities could also raise additional revenue through the leasing of underutilized classroom space, particularly if such revenues were retained by the universities and allocated in part to 0&K on physical plants. . 49 - 3.34 Cost recovery in the helth sector is very limited, with only 10% of total recurrent expenditure recovered through user charges. Although cost recovery ratios are higher for hospitals, averaging about 20%, even these are low compared to the performance of some other developing countries. In Thailand cost recovery in hospitals averages 40%; in China it averages about 80%. These figures suggest that there may be substantial scope for mobilizing additional resources by raising fees. However, caution needs to be exercised before any increase in charges is adopted. Presently, there is only limited availability of health insurance, and informal payments may substantially raise the real cost of government services to patients. Development of carefully designed risk- sharing schemes is an essential complement to the imposition of higher levels of patient fees. Furthenore, fees should largely be restricted to curative care, and graduated to reflect the higher cost of secondary and tertiary care institutions. In urban areas, the Government might usefully explore the option of running some hospitals on a self-financing basis, perhaps as parastatal enterprises. 3.35 The family planning program has so far had very small elements of cost recovery. However, given the seriousness of the problem of rapid population growth and the successful changes that the program has brought about in lowering fertility and increasing contraceptive use (a high level of 46% of eligible couples) the program costs have been demonstrated to be a good investment. For future years, however, services will need to be expanded considerably (by 1 million couples per year, to reach 25 million acceptors in 2000). These heavy requirements, plus anticlpated declines in grant funding, make cost considerations an important matter. The Government is rightly planning on a strategy to shift part of the program to the private sector (perhaps 50%), while still supporting a partly subsidized program with NGOs and through the public health services. 3.36 In the urb infrastructure sector, there is indirect cost recovery through local government and assigned revenues, such as PBB. In addition charges are commonly levied for piped water and solid waste disposal. Prevailing tariff structures and levels for most water supply enterprises (WEs) do not ensure full financial viability. Some lEs have adopted a national tariff structure which als at full recovery of operations and maintenance costs and depreciation; it is expected that this structure will be implemented in all IEs by December 1988. The ultimate objective should be to recover an increasing proportion of capital costs, especially in the larger cities. This should be accompanied by improvements in the financial and operational management of the enterprises so as to ensure that the higher user charges are reflected in the provision of the associated services. Public and private sector bus services generally recover costs adequately in light *f recent fare increases. A possible exception is the Jakarta bus company (PPD) which, despite the fare increase, suffers losses due to severe operational inefficiencies. PPD will have to be restructured in the near future to reduce costs and improve revenues. In general, it is essential that local government departments and enterprises be allowed to raise sufficient revenue to cover the costs of providing services by reviewing and revising user charges regularly. - 50 - D. External Bornrwing Strate 3.37 Despite the Government's cautious approach to external borrowing, the debt service ratio has risen from 17% in 1983 to an estimated 35% in 1987. As noted in Chapter 1, most of this increase has been caused by external factors, especially the decline in oil prices and the depreciation of the US Dollar. Debt payments on past debts are projected to remain high through the end of the 1980s. This heavy debt burden, coupled with the prospect of low oil prices for the foreseeable future, means that Indonesia will have to continue managing its external borrowing very carefully. This will entail keeping a strict limit on borrowing requirements and raising as large a share as possible of its financing on concessional terms. In the short term, there is also a strong case for continued special assistance from IGGI members, in the form of fast-disbursing program aid and local-cost financing. This special assistance will play a vital role in supporting the adjustment in the balance of payments and the Budget over the next couple of years. FLUancing Reauirements 3.38 The macro-projections presented in Chapter 2 are predicated on the assumption that Indonesia will continue with its adjustment program. Accordingly, the current account deficit is projected to decline from an annual average of US$2.7 billion over the past three years to US$1.8 billion in 1988/89 and 1989/90 (see Table 3.3). However, once allowance is made for higher amortization payments and the need to maintain adequate external reserves, the annual financing requirement is projected to average US$7.8 billion, 30% larger than over the past three years. The financing requirement subsequently stabilizes in the early 1990s, as lower current account deficits offset higher amortization payments and reserve accuwmlation, before rising again toward the end of the decade. An increasing share of this financing requirement is projected to be met by direct foreign investment, in response to the ongoing program of regulatory reform and the strong growth of the economy in the 1990s. Private and short-term capital flows are aIso expected to strengthen, in contrast to the bouts of speculative pressure against the Rupiah in recent years. Even so, for the next two years, as much as 80% of Indonesia's external financing will have to come from public JLT loans. As the importance of direct foreign investment increases, this ratio falls to about 70% during the 1990s. 3.39 For the next two years, about half of the required disbursements are expected to come from existing commitments. The outstanding balance of undisbursed commitments totalled about US$20 billion at the end of 1987. This amount includes US$2.7 billion of undrawn commercial credits; allowing for expiring credit lines, the Government will have to borrow US$0.7 billion during 1987/88 to keep this balance at around US$2 billion (as a contingency against unexpected oxternal shocks). The remaining undisbursed balance is largely tied to the implementation of ongoing projects. As noted in Chapter 1, there has been a recent improvement in implemention performance and this trend is expected to continue. Therefore, pipeline disbursements are projected to average - 51 - I6ble 3.3: EXTERNAL CAPITAL REQUIREMENTS AND SOURCZS, 1985/86-2000/01 (annual averages, US$ billiou) Actual Projected 1985/86- 1988/89- 1990/91- 1996/97- 1987/88 1989/90 1995/96 2000/01 ReauLreaents 6. LA, 2*7 1.i Current account deficit 2.7 1.8 0.9 0.8 of which: interest payments (3.0) (3.9) (3.8) (4.0) Amortization payments 3.6 5.4 6.0 6.4 Change in net foreign assets -0.3 0.6 0.8 2.1 Sources 7,O Li.7 Direct foreign investment 0.3 0.5 1.0 2.1 Short-term and. other capital (net) La 0.5 1.0 1.1 1.0 Disbursements of public NLT loans 5.2 6.3 5.6 6.2 Of which: Project aid 1.8 2.6 3.5 4.0 Special assistance A 0.6 2.0 0.1 - Import-related credits 1.3 0.9 0.9 0.7 Commercial credits 1.1 0.3 1.1 1.5 Other / 0.4 0.5 - La Includes errors and omissions and valuation adjustments. Mb Fast-disbursing program aid and local-cost financing. X Credits for LNG expansion, LPG and paraxylene projects. Source: World Bank staff estimates. US$3.6 billion p.a. over the next two years. Assuming continued support in the form of fast-disbursing special assistance, the balance of public loan disbursements could be met with annual commitments of around US$5.5 billion, as compared to US$4.9 billion in 1987/88. The commitment levels are projected to rise on average by 4-5% p.a. in nominal terms in subsequent years. The projected requirements by source are summarized in Table 3.4. 3.40 Indonesia has made less use of import-rolated credits in recent years. This trend reflects the Government's decision to reduce public investment in large capital-intensive projects and to place strict limits on the use of non- concessional credits under Presidential Instruction No. 8 of 1984. Consistent with the provisions of this instruction, a number of donors and export credit agencies (e.g., France, Federal Republic of Germany, the United Kingdom and the US Exim Bank) have recently agreed to provide mixed credits on concessional terms. However, given the limited scope for starting major new projects, the - 52 - Table 3.4: PROJECTED COMMITMENTS OF EXTERNAL PUBLIC LOANS AND GRANTS, 1987/88-2000/01 (US$ million) Growth rate (4 2a. ) Estimate Projected 1990/91- 1995/96- 1987/88 1988/89 1989/90 1990/91 1995/96 2000/01 Project aid 2,440 2,400 2,600 3,000 6.8 4.2 Special assistance La 750 &k 2,400 1,500 700 La - Import-related credits 300 300 400 500 5.0 5.0 Commercial credits 890 700 700 1,000 5.0 5.0 Other JA 520 - - - - - Total 4.900 5.800 5.200 5.200 4.5 /A Fast-disbursing program aid and local-cost financing. 1k Excludes the local-cost financing loan from Japan Exim Bank (US$905 million) and the Trade Policy Adjustment Loan from the World Bank (US$300 million) signed in the first quarter of 1987. i; Special assistance is projected to fall to zero from 1991/92. /d Credit for the paraxylene project. Source: World Bank staff estimates. Government will have to continue to restrict new commitments of import-related credits over the next couple of years. Accordingly, the projections assume that only US$0.3-0.4 billion p.a. will be available from this source in 1988/89 and 1989/90. In subsequent years, commitments of import-related credits are projected to rise on average by about 5% p.a. in nominal terms. 3.41 Untied commercial credits provide the Government with more flexibility than import-related credits. However, because of their non-concessional terms, they are still less attractive than program aid from official sources. Furthermore, access to commercial credit cannot be taken for granted, especially at a time when many banks are consolidating and reducing their exposure in developing countries. During 1987/88, Indonesia signed agreements for US$0.9 billion in syndicated loans and will have to borrow another US$0.7 billion during 1988/89 to maintain the undravn balance of commercial credits at about US$2 billion. The projections assume that new commitments of commercial credits remain at this level in 1989/90. Given the amortization pay ents due in these years, this implies a reduction in commercial bank exposure to Indonesia. However, once the adjustment in the balance of payments is completed, and Indonesia's external debt burden eases, there will be greater scope for increased commitments of commercial credits. - 53 - 3.42 As in the past, the major source of external finance will be 2roject &l, primarily from members of the Inter-Governmental Group on Indonesia (IGGI). Given the limited scope for starting new projects, and the scarcity of counterpart funds in the Budget, the level of project aid comitments has levelled off in recent years and is projected to remain around US$2.4 billion in 1988/89. There has also been a shift in the composition of project aid towards rehabilitation and sector-based operations. The World Bank, for example, approved two sector loans for the urban and irrigation sectors in 1987/88, with a total comuitment amount of US$504 million. These loans will finance a time slice of expenditures (including operations and maintenance) over the next two to three years, improve cost recovery and local resource mobilization, and strengthen sector institutions for planning and implementation. This type of assistance will continue to have a high priority. However, as economic activity and investment levels pick up, there will also be more scope for projects to expand capacity. Given the increasing role projected for private investment, especially in support of the export effort, it will be important to find mechanisms to channel aid-financed funds to the private sector, either through direct lending or financial sector operations. 3.43 As discussed at length in last year's Economic Report, the current circumstances in Indonesia warrant sRecial assistance -- in the form of untied and concessional fast-disbursing aid -- to support the adjustment in the balance of payments and the Budget to lower oil prices and adverse exchange rate changes. The response to this need has been very encouraging, with daisbursements of special assistance totalling about US$1.4 billion during 1987/88. The balance of payments projections presented in Chapter 2 indicate that continued special assistance, at a level of US$2.4 billion, will be required for 1988/89. Program aid and local-cost financing both provide free foreign exchange for the balance of payments during the adjustment period. For the Budget, program aid has the added advantage that it can be used flexibly to finance all expenditures related to project implementation (e.g., land acquisition) as well as complementary measures to improve project effectiveness (e.g., 06K or tertiary canals for an irrigation system). Without this support, import and investment levels would have to be further constrained, thereby adversely a'fecting economic growth, the non-oil export effort and medium-term development prospects. This assistance will also provide an important signal to world financial markets that the IGGI members support the Government's adjustment program and have confidence in Indonesia's economic prospects. At the same time, the provision of special assistance has to be seen as a temporary expedient, matched by the Government's efforts to improve non-oil export performance and public resource mobilization. As the external and domestic financing gaps are narrowed, special assistance can and should be phased out. Accordingly, the balance of payments projections assume a steady reduction in special assistance to US$1.5 billion in 1989/90 and US$0.7 billion in 1990/91, with no new commitments in subsequent years. 3.44 As in the past, a portion of the projected requirements for project aid and special assistance is expected to be-provided outside the IGGI. Allowing for these amounts, it is recommended that the level of IGGI assistance to - 54 - Indonesia in 1988/89 be US$3.6 billion, 13% higher than pledged for last year. To the extent possible, donors are urged to provide their comitments in the form of special assistance. Debt and Debt Servicing 3.45 As discussed in Chapter 1, Indonesia's external debt has grown rapidly over the past three years and the debt service ratio is now at a high level (35%). However, in gauging the significance of Indonesia's debt position, it is important to take note of several factors: (a) the recent increase in the debt service ratio is largely due to external factors, especially the decline in oil prices and the depreciation of the US Dollar; (b) because of the relative importance of concessional assistance in Indonesia's debt, the ratio of interest payments to exports (the 'interest cover") is significantly lower (158) than in most highly-indebted countries; (c) the Indonesian Government is implementing a successful adjustment program, including restraint on non-concessional credits and policies to develop non-oil exports; and (d) as a result, all of the key debt ratios are projected to decline steadily after 1988. With continued progress on adjustment and an appropriate borrowing strategy, Indonesia is in a good position to reduce the burden of its external debt, while also mobilizing adequate resources to support economic recovery and development. 3.46 With the borrowing strategy outlined above, the growth of Indonesia's external debt will slow considerably over the next few years, with virtually all of the increment in the form of official assistance. As shown in TZiile 3.5, total ILT debt disbursed and outstanding (DOD) is projected to rise from US$47.3 billion in 1987 to US$53.2 billion in 1990, an increase of only 12%. Debt service payments will rise more rapidly, by an estimated 33%, over this period. But, with the projected growth in non-oil exports, the debt service ratio will peak at close to 40% in 1988 and then decline in subsequent years, falling back to 35% by 1990. Similar trends are evident in the debt service/GNP and interest/exports ratios. The DOD/exports ratio falls more rapidly from the peak level of 251% in 1986. Once the adjustment process is complete, a-nd the external debt burden eases, there would be some scope for a more rapid expansion of external borrowing during the 1990s. Under the proposed borrowing strategy, new commitments of external loans are projected to rise on average by 4-58 p.a. over the medium term. Even so, the debt service ratio continues to fall, reaching 22% in 1995 and 15% by the year 2000. 3.47 The debt service ratio would be adversely affected if the external environment were less favorable than projected or if Indonesia were unable to mobilize the projected levels of official assistance, thereby forcing increased dependence on more expensive forms of commercial borroving. However, as noted in Chapter 2, the projections already include a contingency'of reserves to protect against an unexpected external shock, and the Government's long-standing record of sound economic management provides confidence that the required adjustment measures will be taken. Therefore, provided the Government can mobilize the projected levels of external financing, especially the short-term requirements for concessional untied assistance, Indonesia's balance of payments position is expected to remain manageable and to strengthen over the medium - 55 - Table 3.5: MEDIUK- AND LONG-TERN DEBT, 1985-2000 La (US$ billlon) Actuals Prolections 1985 1986 1987 1988 1989 1990 1995 2000 Disbursed & outstanding/b 38.1 & . 51,.82 l 56.L2 61.4 Public debt i; 28.3 34.3 43.2 45.7 47.3 48.7 52.5 57.2 Private debt 3.8 3.8 4.1 4.3 4.5 4.5 4.2 4.2 WFoization gayments 3. -3 1L 3.L 5LA _ 6. Public debt i; 2.5 2.6 3.3 5.2 4.7 4.6 4.8 5.4 Private debt 0.8 0.5 0.6 0.6 0.8 1.0 1.2 1.2 Interest payments _2 2_E _t 3.2 3.3 3.3 32 34IA Public debt I& 1.8 2.2 2.5 2.8 2.9 2.9 2.9 3.0 Private debt 0.4 0.3 0.3 0.4 0.4 0.4 0.3 0.4 Total debt service 5.5 5. 6.2 9. 8. 8 9. Public debt LŁ 4.3 4.8. 5.8 8.0 7.6 7.5 7.7 8.4 Private debt 1.2 0.8 0.9 1.0 1.2 1.4 1.5 1.6 Debt ratios (0) Debt service/exports LtOA 25.4 36.8 34.7 39.9 38.2 35.4 22.0 15.3.. Debt service/GNP IS 6.3 7.8 10.3 12.0 11.7 10.9 7.1 4.9 Interest/exports Ld 11.0 16.3 14.5 15.3 14.3 13.1 7.7 5.2 DOD/exports id 161.5 250.6 243.5 236.6 224.4 211.3 136.2 93.3 DOD/GNP 40.0 52.8 72.1 71.0 68.5 64.9 43.7 29.5 La Projections are based on exchange rates as of December 31, 1987. Lk At end of period. Lc Including credits for LNG expansion, LPG and paraxylene projects. A Denominator is gross exports of goods and services. La Debt service excludes prepayments. Source: Bank Indonesia and World Bank staff estimates. term. Accordingly, the Government remains committed to repay its external debts on schedule, as reiterated in the President's Speech of Accountability in March 1988. 3.48 The Government has made considerable progress over the past two years in strengthening its capacity to monitor and administer external public debt.gL As a result, debt payments are handled in an efficient manner, with no errors U1 Because of the open capital account, there are no formal reporting requirements on private capital flows. - 56 - or delays. An a follow-up, it vwuld now be useful to extend this capacity into the areas of debt analysis and management. This should include, Inter alia, analyzing changes in Indonesiad's debt structure (e.g., sources, terms, currn:i.es), matching the composition of foreign assets and liabilities, monitoring trends in world currencies and interest rates, snd gaining familtarity with the full range of financial instruments available. In the short term, the scope for major gains through more active debt management may bo limited, due to the uncertainties in world financial markets. But, over the medium term, a stronger debt anagement capability could provide the Government with added protection against unexpected external shocks. - 57 - POLICIES FOR STRUCTURAL CHANGE A. Introduction 01 During the early 1980s, Indonesia's trade regime becam increasingly iented towards protecting producers for the domestic market. Backed by public vestment from the oil boom, the Government's industrial strategy leaned wards encouraging *upstream" industries, such as cemont, fertilizer, synthetic bers and iron/steel. Some of these activities required a higher level of otection than that provided by tariffs, particularly when the slowdown in the mastic economy after l9d2 left many carrying excess capacity. Due to these essures, the Government issued several decrees in late 1982 and early 1983 ich dramatically increased the number of products requiring an 'approved porter" license.Zl It is estimated that by mid:l986 over 1,700 CCCN items .bout a third of the total) were covered by some form of restrictive license./I -aese items accounted for about 40% of both total import value and domestic production. In addition, 24 products were under import ban (including automobiles. motorcycles, televisions and radios in CBU condition). The increased importance of non-tariff barriers (NTBs), coupled with the existing import tariff structure, provided high and disparate rates of protection to domestic producers which fostered the development of many high-cost and inefficient industries. 4.02 Enterprise performance was also affected by the proliferation of domestic regulations and licensing procedures. Investment and capacity licensing increased, and control over foreign investment tightened. It became increasingly more difficult to enter an activity where a domestic producer was already operating (albeit inefficiently) and expansion of an existing plant or diversification into new product lines was subject to a cumbersome number of administration decisions. In some cases the protection provided against international competition by NTBs was compounded by protection from domestic competition by restrictive domestic licensing arrangements. In other cases, a complex combination of trade and domestic regulation was used to shape the development of a particular subsector (e.g., the "deletion program" which attempted to increase the local content of engineering products). LI This restricted the right to import such a good to designated producers or traders. The actual degree of restriction varied according to the type of license category the good was classified under (i.e., there was more than one type of import license) and on whether a formal quota or ban was in effect. LI About 20% of these items were listed as eligible for quotas, 7 of which were effectively banned (i.e., had a zero quota), 149 have had value or volume quotas, and 140 have no fixed quotas (but require administrative approval from th Ministry of Trade at the time of import). - 58 - 4.03 As oil-related export earnings and tax revenues decllned in the early 19809, the danger of pursuing an inward-looking development strategy became apparent. Sluggish domestic demand undermined profitability, while protection from foreign and local competition undermined efficiency. In addition, ioplementing the complex regulations required increased administrative discretion which created opportunities for abuse. The resulting thigh-cost economy was not goared towards generating the expansion in non-oil exports needed to replace oil earnings or provide the necessary employment opportunities. A fundamental change in the incentive and regulatory framework was required to open up the economy to world warkets so as to sustain domestic growth. The Government has responded to this need by implementing a ser'es of far-reaching trade and industrial policy reforms over the past three years. Recent progress in these areas, as well as priorities for follow-up action, are discussed in Sections B and C below. 4.04 The ability of business enterprises to respond to the ongoing program of trade and industrial policy reforms, and to support the non-oil export drive, will depend critically upon complementary development of the financial sector. It is apparent that the next stage of industrial devslopment will require a substantially higher private investment effort. However, while recent financial sector reforms have led to rapid deposit growth, they have been less successful in improving the availability and cost of long-term investment funds. In addition, a significant portion of the corporate sector is undergoing financial distress as a result or cost pressures and adverse domestic market conditions. The ability of manufacturing firms to grow in the future, therefore, will rest not only on physical restructuring to reorient production toward export markets, but also on financial restructuring to generate sufficient funds to undertake the required investment. In turn, the ability of the financial sector to meet these funding needs will be determined by actions to improve the efficiency of the banking system and develop capital markets. Related issues of financial sector development are discussed in Section D. B. Trade Policy Reforms Some Initial Stens 4.05 The first steps towards improving the trade regime were taken during 1985 and 1986. First, in March 1985 the Government implemented a comprehensive reform of the tariff schedule. The tariff ceiling was lowered from 2250 to 60%, and the number of tariff positions was reduced from 25 to 11 (see Table 4.1). The reform also raised the percentage of items with tariffCs below 30% from about 59% to 82%. Although this resulted in an unequivocal improvement in the trade regime, its effect was mitigated by the proliferation of import licenses. Second, in April 1985, the Government completely reorganized the customs. ports and shinninr operations. It placed the sensitive job of certifying imports in the hands of private surveyors (SGS). This has reduced both the mmbers of customs officials required and the discretion used at the port of entry. As a result, the average time spent on customs procedures has been cut by several weeks, and the cost of freight forwarding both for exports and imports has - 59 - Table 4 .1: RECENT CHANGES IN THE TARIFF SCHEDULE La 1980 schedule 1985 schedule Present schedule /b No. of t of No. of % of No. of % of Tariff tariff CCCN items tariff CCCN items tariff CCCN items rates categories covered categories covered categories covered 0% 1 6.5 1 6.3 1 9.1 Up to 5% 4 29.2 2 32.0 2 35.4 Up to 10% 6 39.5 3 44.9 3 47.8 Up to 15% 7 41.9 4 50.3 4 52.5 Up to 20% 8 47.8 5 64.0 5 62.5 Up to 30% 10 58.7 6 81.8 6 80.5 Up to 40% 12 70.6 7 91.5 7 90.2 Up to 50% 14 77.9 8 96.2 8 95.4 Up to 60% 15 90.1 9 99.6 9 99.5 Up to 80% 17 95.1 9 99.6 9 99.5 Up to 100% 19 99.6 10 99.9 10 99.9 Up to 200% 24 99.9 11 100.0 11 100.0 Up to 225% 25 100.0 La Table shows cumlative number of tariff categories and percent of CCCN items covered at various tariff rates. Specific tariffs are excluded. Lk As of December 24, 1987. Source: Ministry of Finance and World Bank staff estimates. declined enormously. Third, on Nay 6, 1986, the Government announced a package of measures designed to nrovide internationally-2riced inuuts to exoorters. Indonesia's accession to the GATT Code on Subsidies and Countervailing Duties in 1985 required withdrawal of the Export Certificate Scheme.Lj As a result, it became necessary to find an alternative method to protect the competitiveness of Indonesian exporters from the "high-cost" local economy and import lcense restrictions. The Nay 6 program was designed to do this by allowing "producer- exporters" the option of importing their inputs free of restrictions and exempt from import duties. The significance of the program goes beyond allowing Li As a scheme for rebating exports, the Export Certificate Scheme suffered a number of drawbacks. The level of payment often did not relate to actual duty cost and was often viewed in importing countries as a direct subsidy. In addition treatment was uneven, in some cases actual payment was less than the duties borne: usually for the more competitive exporters able to compete without subsidy. A final difficulty was that, even if import duties were fully rebated, the scheme did not provide a method of bypassing the approved traders, and therefors did not compensate exporters for the costs imposed on them by the restrictive import license system. - 60 - imports to be brought in duty-free as it also allows producer-exporters to bypass the approved traders. In addition, a duty drawback facility was creatod to enable indirect exporters to reclaim import duties. 4.06 Initially there vere doubts whether the complex regulations and the creation of a new government body would assist exporters effectively. However, the executing agency (P43K)ZI has worked smoothly, with 'arms length' administration and sinimal delays in processing applications. P4U has been able to reduce and standardize the information required to grant producer- exporter status (basically an export order verified by the exporter's bank and detailed information on input-output coefficients). As shown in Table 4.2, the scheme has provided exporters with almost US$1 billion of ioports during the 18 months through December 1987, accounting for about 6% of total non-oil imports over this period. These imports were allowed to bypass the approved-trader qtrictions and were exempted from US$430 million in taxes. It is also -uraging to note that access to the May 6 scheoe has been broadened from the "al focus on textiles to include significant numbers of exporters in the * :ocessed food, chemical and wood product sectors. Table 4.2: INIEKENTATION OF MAY 6 SCHEME LA (US$ million) Value of Value of exemptions Activity imports approved Import duty VAT ft ort;8rS, 989.4 310.0 ,122.0 Textiles and garments 315.5 148.5 46.3 Processed foods 329.3 104.9 37.0 Chemicals 73.6 17.3 8.3 wood products 105.5 13.5 11.8 Other 165.5 25.8 19.1 Governent proects 1686 38A Total 1 158 0 341.8 122-5 La From July 1, 1986 to December 31, 1987. & The May 6 scheme also applies to contractors for foreign-assisted government projects. However, the text discussion focusses on exporters only. Source: Ministry of Finance. a The Pusat Pengelolsan Pembebasan dan Pengembalian Bea Nasuk of the Ministry of Finance. - 61 - 4.07 However, vhile these initial steps were welcome, they did not directly address the distortions created by the proliferation of ioport licences. Indeed the rationalization of the tariff schedule and the improvement in customs procedures increased the relative importance of NTBs. And while the May 6 scheme is a useful mechanisA by which to overcome the cost raising effects of NTMs and high tariffs, it does not directly reduce the anti-export bias of the trade regime. For example, smaller exporters may be deterred from applying due to administrative costs or because they are reluctant to break established relationships with large donestic trading companies. Furthermore, the scheme can only indirectly encourage domestic import-substitution activities to increase efficiency. Hence, the need for more fundamental reforms to reduce the role of NTBs and move towards a tariff-only system of protectlon. Recent Trade Reform Measures 4.08 Three major trade reform packages were announced in October 1986, January 1987, and December 1987. These packages have focussed on three priority asras: (a) removing import licensing restrictions; (b) adjusting tariffs and surcharges; and (c) directly reduclng the anti-export bias. 4.09 Inuort licenslng. These three packages marked significant progress towards the Government's primary objective at this stage of trade reform, i.e., to move away from a trade regime dependent on NTBs to one based on tariffs. As shown in Table 4.3, the total effect of the reforms has been the removal of 539 items from license control, accounting for 31% of all items, and 41% of total Table 4.3: IMPACT OF REFORM PACKAGES ON IMPORT LICENSING COVERAGE SINCE 1986 Before reforms Post Post Post Coverage mid-1986 Oct. 1986 Jan.1987 Dec. 1987 * of CCCN itemssA 31.4 27.9 25.7 21.7 * of import value,& 42.9 34.9 31.5 25.2 8 of total domestic productionL 43.5 41.5 40.6 39.5 meum it * of domestic production in: ainufacturing 49.1 42.4 38.8 34.8 Agriculture 66.4 65.7 65.6 65.4 Mining and minerals 0.2 0.2 0.2 0.2 tA Based on 1985 Tariff Schedule. Total number of CCCN items estimated as 5,500. ik Based on CBS 1986 import data at seven digit CCCN level. i; Estimated as the 1985 value of domestic production minus exports protected by restrictive import licenses a a share of total domestic production, all at unassisted prices. Source: World Bank staff estimates. - 62 - import value.l More ioporte'tly, the share of total domestic production covered by ioport licensing has declined from 43.5% in mid-1986 to 39.5% at the end of 1987. The reduction in manufacturing production -- where the reforms have focussed -- has been more significant, declining from 49.1% in aid-1986 to 34.8% by end 1987. Moreover as explained below, the reduction in import licensing has concentrated on those items with the highest effective rates of protection. 4.10 The reform effort has had less of an impact on domestic production than on either import value or the number of CCCN items for two reasons. First, the reforms have not tackled license restrictions in the agricultural sector, which accounts for 47% of total production but only about 10% of total import value.L2 A number of agricultural commodities are under import licerse (e.g., rice, wheat and many food and beverage products) which account for a large share of domestic production. However, as the effective rate of protection estimates provided in Table 4.4 indicate, most of these commodities (with the notable exception of food and beverages) do not derive high levels of protection from the license restriction, and hence are not priority areas for reform.L2 Second, within manufacturing, relatively more progress has been made in removing license restrictions on imported items than on domestically produced items. It may be desirable to lower restrictions on imported inputs during the initial stages of reform as it provides exporters with access to their inputs at international prices and reduces the domestic resistance to change. Nevertheless, the further the reforms proceed, the more difficult it will be to avoid this challenge. During the process of structural change some sub-sectors will inevitably contract, but -- as the rapid increase in manufactured exports since 1986 illustrates -- others will expand. And, over the medium term, the resulting shift in resources will create a more competitive manufacturing sector capable of supporting a higher level of employment and non-oil exports. 4.11 It is important to note that the foregoing analysis is based on a very strict definition of licensing restrictions, i.e., &ul licenses (other than for general imports) are assumed to be restrictive. In practice, however, the degree of protection provided by the different import licenses varies significantly. The least restrictive of these licenses (IP) allows imports by all producers who require these items as inputs into their production process. The reform packages have placed many of the restricted items in the textile and engineering goods sectors under the IP license. As a result, virtually all production in textiles now falls under the unrestricted or IP license category. Furthermore, as many textile producers export a large 21 A further 5 items (i.e., CBU radios and TVs) were removed from license control but remained banned under an earlier decree. The analysis does not, therefore, treat these items as having been moved off license. 2 Under the definition used here, manufacturing accounts for 25% and minerals/metals 28% of domestic production. a iXThis partly reflects domestic competition and partly the fact that some of the more important license restrictions are imposed to achieve procurement, domestic distribution, and food security objectives and not, necessarily, to protect domestic producers. - 63 - Tablkl4.4: STRUCTURE OF NOMINAL AND EFFECTIVE PROTECTION Nominal protection Effective rate Output on output of protection Sector (Rp trillion) (%) (%) Aifiulture and agoproessi Food crops 16.5 15 19 Estate and other crops 6.9 6 11 Livestock 4.9 23 23 Forestry 1.6 -17 -25 Fishing 2.1 25 22 Food, beverages and tobacco 18.0 23 37 ManufaI=Luag Textiles, clothing and footwear 3.8 35 49 Wood products 3.9 3 14 Paper products 1.1 22 14 Chemicals 2.9 21 45 Non-metallic products 4.3 29 43 Basic metals 1.9 8 31 Engineering 6.4 37 48 Other manufacturing 0.5 38 40 Mining and petroleum Mining and quarrying 1.2 6 4 Oil and gas 24.2 0 -1 Source: George Fane and Chris Philipps, 'Effective Protection in Indonesia" (December 1987). proportion of their total output, they also have access to the May 6 scheme which bypasses all import restrictions. In the engineering goods subsector, most unassembled kits can now be imported with an IP license, and most imports of components are free of license restrictions.iL This has put more competitive pressure on domestic component manufacturers. However, many final goods in the engineering good sectors continue to remain under restrictive license or import bans. 4.12 In addition to reducing the share of manufacturing production covered by restrictive import licensing, an important measure of the significance of the reforms is the extent to which import licenses have been removed for the most highly protected manufacturing activities. Table 4.5 shows how the share of LI A very important part of the December 1987 reform package was the reduction in the number of items in the machinery and heavy plant subsectors under the AT (sole agent) license from 278 to 70. - 64 - domestLi production protected by import licenslng has changed for individual subsectors, and Table 4.4 presents estimates of the level of nominal and effective protection for the same subsectors prior to the most recent reforms. It ls clear from comparing the two tables that the most rapid declines in the share of domestic production protected by import licensing have occurred in the textile, clothing and footwear, basic metals, and engineering subsectors, all of which were afforded high levels of protection under the previous trade regime. Table 4.5: EFFECT OF REFORM PACKAGES ON MANUFACTURING SECTOR SINCE 1986 (I of domestic production covered by import licenses) /a Before reforms Post Post Post Coverage mid-1986 Oct. 1986 Jan. 1987 Dec. 1987 Textiles, clothing and footwear 64.0 61.3 38.2 38.2 Wood products 0.0 0.0 0.0 0.0 Paper and printing 69.6 50.4 50.4 50.4 Chemical products 59.9 52.1 51.1 51.1 Non-metallic products 28.2 21.7 21.7 21.7 Basic metals 45.5 44.6 38.6 29.2 Enguineering products 86.7 73.5 73.5 60.3 Other manufacturing products 28.9 25.2 25.2 24.6 Manufac& ing sector i _44. ALA xi 34. 4g Estimated as in Table 4.3. 4k Defined as in Table 4.4. Source: World Bank staff estimates. 4.13 Inort tariffs and surcharges. In addition to reducing import license restrictions, all of the recent trade reform packages have included decrees which changed import tariff rates. The changing pattern of Indonesia's overall tariff structure is illustrated by the frequency distribution of tariff rates in Table 4.1. As shown, the major corrective tariff reform occurred in 1985, and the net impact of the subsequent trade reform packages has been small. 4.14 Recent changes were of two tyDes. First, tariffs were increased on 154 items in October 1986 and on 121 items in December 1987. The primary objective of these increases was to compensate for the removal of license restrictions, within the reduced tariff ceilings set in 1985.La Second, tariffs were lowered 41 In only three instances were tariffs raised above the 60% ceilings set in the comprehensive 1985 tariff reform, and these three items have subsequently been reduced to below the ceiling. - 65 - on 152 items In October 1986, on 55 Items in January 1987 and 124 items in December 1987. In the first two packages, the reductions were focussed on imported inputs wibch are not produced locally, so as to offset the cost-raising effects of the September 1986 devaluation.,a The December reductions went beyond this limited objective In that some focussed on domestically produced Items that were removed from license protection under an earlier decree but provided a high tariff (e.g., paper products). This is an important next step in the reform process of reducing the level and dispark.y of protection through tariff rational! ation. 4.15 The October and December packages also specified 143 items as potentially surchargeable. Only 54 of these had surcharges imposed, with the remaining 89 items having surcharges set at zero.LZ Most of the surcharges are on locally produced steel products for which license protection was removed. The Government's rationale is to use the surcharge as a temporary measure to allow domastic producers time to adjust and as a mechanism to offset predatory dumping. The Government intends to impose a surcharge on a temporary and highly selective basis. These surcharges will be reviewed on a regular basis and extended only if still justified. 4.16 The strategy of moving away from NTBs and toward tariff-only protection inevitably increases the importance of the tariff structure. In those subsectors where license restrictions have been removed and tariffs left unchanged or lowered (e.g., textiles, aluminum products and selected steel products) there has been a reduction in protection. But in those subsectors where license restrictions have been replaced by higher tariffs (or surcharges), or where only the tariff on the imported inputs have been lowered, the level of protection has probably increased. While some ad hoc adjustments in tariffs may be a price worth paying in moving away from NTBs, domestic investors should not anticipate that high tariffs on outputs and low tariffs on inputs will continue. If non-oil exports are not to be discouraged relative to import substitution activities, the Government will have to build upon the limited steps that it took in the December package to reduce tariffs on domestically produced items. 4.17 Esart. polic. The December 1987 package goes beyond the previous two packages in that it addressed some of the restrictions and internal licensing requirements that directly affect exports. The December package abolishes the need to have an APE (Exporter Identification Number) or APES (Provisional Exporter Identification Number) or an APET (Limited Exporter Identification Number). Under the new regulations, both domestic and joint ventures will only L1 For those items that are inputs into export or lightly protected import substitution activities and for highly protected end-products, the reduced tariffs have improved the structure of assistance. But for those items that are inputs into license-protected import substituting activities, the reduced cost of imported inputs will increase protection in already highly protected activities. L2 38 items have been set at 30%, 9 items at 108, and 4 items at 20%, 17.5%, 12.5% and 2.5% respectively. - 66 - have to present their business permit to prove their identivy.I, This is a significant stop in reducing the redundant rules and regulations that restrict exports. It is anticipated that it will particularly assist small exporters and help encourage the diversification of exported items. For example, smaller handicraft producers no longer have to chann.l their expo _. trade through holders of an APE. In addition, it is no longer necessary to obtain an export license for textile exports to non-quota countries. The December package also reduced the items covered by export bans or domestically imposed export quotas. Export bans on 10 items (primarily processed wood products) and export quotas on 24 items (processed meats, refined coconut and palm oil, copra, sugar, asphalt, tires, jewelry and basic iron) have been abolished, and the export of tobacco is no longer restricted to a list of approved exporters. However, the Ministries of Trade and Agriculture have indicated that exports of certain food products (e.g., crude palm oil) will still require a *letter of approval'. 4.18 Finally, the May 6 scheme, which successfully provided exporters with access to their required imported inputs, has been broadened in a number of ways. First, the December package has increased access to the import duty/VAT exemption scheme of P4BM by lowering the proportion of a firm's total output that has to be exported to qualify. Henceforth, a firm will only have to export 65% (previously 85%) of total production to be granted an exemption from import license restrictions and duties/VAT payments on 100% of the firm's required imported inputs. For the portion sold domestically, firms pay duties and VAT retroactively based upon a reconcilation report filed every semester. Second, P4BK can now provide the same exemptions to the imported machinery that non- PNA/PMDN companies need to expand production for exports. It is anticipated that this will reduce the time taken for approval from, in some cases, one year to a month or less. Third, P4BK can now provide exemptions on the raw materials and machinery used by contractors that undertake government projects.,a Lastly, the drawback system for VAT on domestic raw materials used by exporters has been transferred from the Domestic Tax Inspection Office to P4B1. This consolidates the drawback facility (i.e., including import duty) in one department and should speed up processing. Agenda for Follow-un 4.19 Ensure nroler implementation. To fully benefit from the trade reform effort, the Government needs to strengthen its implementation and monitoring capacity. As shown in Table 4.6, a significant number of the products covered by the reforms have become classified under either the IP (actual user) or IT (trading companies) license category. To be granted an IP license, the Ministry of Trade has announced that the producer should submit a business permit, the producer or limited identification number, the company registration certificate a2 Except those products governed by international trading agreements or where Indonesia is a major world srpplier. a2 Previously, the exemptions were limited to those items of machinery and goods that were on the tender masterlist that would be transferred to the Government when the project was complete. - 67 - Table 4.6: LICENSE STATUS OF ITEMS COVERED BY DECREES SINCE OCTOBER 1986 IU IP AT IT Other Total Number 544 192 70 361 62 1,229 Percentage 44.3 15.6 5.7 29.4 5.0 100.0 Source: Ministry of Trade. and, where applicable, a letter of recommendation from the Ministry of Industry. Since October 1986 about 250 IP licenses have been issued, and the value of imports entering Indonesia under the IP license has more than doubled. The Ministry of Trade estimates that less than 10% of applicants have been rejected (due to inadequate documentation) and that the processing time is 3 to 4 days. It is import-Ant that the Ministries of Industry and Trade both continue to search for ways to simplify and make more transparent license application procedures. It may also be useful for both Ministries to strengthen their monitoring capacity (e.g., nunber of applicants, number of approvals, processing time) and to use this information to assess or demonstrate how efficiently the current system is operating. For those items classified as IT the potential applicants are clearly known i.e., the six trading companies specified as IT license holders.,a. However, it will be important to encourage the nominated trading companies to compete, particularly by discouraging collusion and by not imposing any informal or formal quota restrictions. 4.20 Lastly the criteria by which surcharges are imposed needs to be clearly defined. For example, the December package specified 110 items as potentially surchargable but set the surcharge for 59 of these items at zero. This creates a need to establish an analytical capacity to assess whether an appeal for a surcharge is valid and, if so, what the rate should be. In addition, as the Government intends to use surcharges as a temporary anti-dumping measure, the time limit on existing surcharges and the procedures for review needs to be determined. 4.21 Simpllfy the license categories. The subdivision of products into different, and in some cases very restrictive, license categories makes the system complex and could result in unintended restrictions. The approach taken to this problem in the trade reforms to date has been to classify a particular product under more than one license category. For example under the January 15 decree practically all the items that were classified as IP were also classified as IT. This makes sense as it allows smaller producers, who do not find it profitable to import directly, to obtain their import needs through domestic 21 These are P.T. Pantja Niaga, P.T. Dharma Niaga, P.T. Tjipta Niaga, P.T. Kerta Niaga, P.T. Mega Eltra and P.T. Sarinah. - 68 - trading companies. Alternatively, under the December decree, the 70 itema classified as AT were also classified as IU. However, in this case, the potential IU importer requires a letter of no objection from the AT holder. 4.22 The need to place an item in more than one license category suggests that the license categories may be too narrowly defined. One solution would be to simplify the license system by reducing the number of license categories. For example the IP and IT licenses could be merged, supported by a clear statement that all potential applicants bave equal access to the items so classified. This type of reform would reduce the complexities of the system and reduce the significance of the restriction. This would be similar to the change in the domestic regulatory environment which allowed firms to diversify production into much broader product categories. The objective would be to broaden the license coverage to ensure that domestic producers, particularly for the export market, can obtain their inputs at the most competitive prices. 4.23 Limit coverage of import/exnort bans and quotas. As these forms of NTBs provide the highest form of protection (in the most extreme cases encouraging smuggling), it would be advisable to limit their coverage to a few strategic or health-related items. Currently, there is a great deal of administrative discretion and lack of transparency. Many items that are under quota -- both on the import and export side -- have no fixed formal quota and others appear to be subject to informal restraints. For example, despite the removal of the formal quota on palm oil exports in the December 24 package, exporters must still obtain a letter of approval from the Ministry of Trade. This lack of clarity increases uncertainty and widermines private sector investment. It would be useful for the Government to take stock of the items under quota or ban and publish a definitive list of these items with the quota ceiling or the agency responsible for fixing/allocating the quota clearly defined. Before an item is placed under either a quota or ban, a strong case should be made as to why an import tariff or an export tax is inappropriate. In general an import tariff/export tax is preferable to the use of bans or quotas. In the case of exports, however, even the use of an export tax needs to be considered carefully. This is because no country can have the same degree of influence over the global export market as it has over its domestic market. Thus, the dangers of losing market share (either by encouraging other producers or product substitution) and the costs imposed on the producer of the taxed export commodity (mostly raw materials) should be weighed against the potential benefits provided to domestic users of the taxed commodity. 4.24 Reduce license coverage. The Government is committed to continue reducing the number of items subject to restrictive licenses. This should include those sectors which have not been dealt with so far as well as a reconsideration of those already covered by past decrees. The prime objective is to move the maximum number of items off license and under a tariff. For example, while the reduction in the number of items classified as AT from 278 to 70 under the December 24 package was a significant achievement, only 111 of these items were moved to IU status. ~~~~~~~~~STATISTICALANE List of Tables fo2nzlation and Employment 1.1 Population and Growth Rates by Province, 1930-1985 1.2 Distribution of Population by Age Group and Sex, 1961-1985 1.3 Employment by Main Industry, 1971-1985 National Income Accounts 2.1 Gross Domestic Product by Industrial Origin at Current Market Prices, 1978-1986 2.2 Gross Domestic Product by Industrial Origin at Constant 1983 Market Prices, 1978-1986 2.3 Expenditure on GDP at Current Market Prices, 1978-1986 2.4 Expenditure on GDP at Constant Market Prices, 1978-1986 2.5 Distribution of GDP at Current Market Prices, 1978-1986 2.6 Distribution of GDP at Constant Market Prices, 1978-1986 International Trade & Balance of Payments 3.1 Balance of Payments, 1974/75-1987/88 3.2 Non-oil Exports, 1981/82-1987/88 3.3 Value of Exports by Principal Country of Destination, 1974-1987 3.4 Value of Imports by Principal Country of Origin, 1974-1987 3.5 Oil Balance of Payments, 1976/77-1987/88 3.6 LNG Balance of Payments, 1977/78-1987/88 External Debt 4.1 Summary of External Debt, 1975-1987 4.2 External Public Debt Outstanding as of December 31, 1987 4.3 Service Payments, Commitments, Disbursements and Outstanding Amounts of External Public Debt, 1978-1995 Public Finance 5.1 Central Government Budget Summary, 1974/75-1988/89 5.2 Central Government Receipts, 1974/75-1988/89 5.3 Central Government Expenditures, 1974/75-1988/89 5.4 Development Expenditures, 1974/75-1988/89 5.5 Development Expenditures by Sector, 1974/75-1988/89 5.6 Project Aid by Sector, 1974/75-1988/B9 - 152 - Moneta Statistics 6.1 Money Supply, 1974-1987 6.2 Changes in Factors Affecting Money Supply, 1974-1987 6.3 Consolidated Balance Sheet of The Monetary System, 1974-1986 6.4 Consolidated Balance Sheet of The Monetary Authorities, 1974-1986 6.5 Banking System Credits by Economic Sector, 1974-1986 6.6 Banking Credits Outstanding in Rupiah and Foreign Exchange by Group of Banks, 1974-1986 6.7 Small-Scale Investment Credits and Permanent Working Capital Credits, 1974-86 6.8 Investment Credits by Economic Sector, 1980-1986 6.9 Time Deposits with State Banks, 1981-1986 6.10 Interest Rates on Deposits at Commercial Banks, 1978-1987 Agricultural Statistics 7.1 Principal Agricultural Products by Subsectors, 1974-1986 7.2. Production of Major Crops by Type of Estate, 1974-1986 7.3. Rice-Area Harvested, Production and Yield, 1974-1986 7.4 BULOG Rice Program , 1978/79-1987/88 7.5 Area Covered Under Rice Intensification Programs, 1974-1986 Industrial Statistics 8.1 Index of Manufacturing Production by Selected Industry Group, 1975-1987 8.2 Production of Minerals, 1974-1986 8.3 Crude Oil Production by Company, 1974-1987 8.4 Petroleum Product Supply and Demand, 1974-1987 8.5 Domestic Sales of Petroleum Products, 1974-1987 Priges 9.1 Consumer Price Index, 1979-1987 9.2 Indonesia Wholesale Price Index, 1983-1987 9.3 Domestic Prices of Petroleum Products, 1974-1987 Investment Statistics 10.1 Approved Foreign Investment by Sector, 1977-1987 10.2 Implementation of Foreign Investment by Sector, 1977-1987 10.3 Approved Domestic Investment by Sector, 1977-1987 Standard T4_aU .a 11.1 National Accounts Summary at Current Prices, 1978-1986 11.2 National Accounts Summary at Constant 1983 Prices, 1978-1986 11.3 Implicit Deflators for National Accounts (1983-100), 1978-1986 11.4 Balance of Payments Summary at Current Prices, 1978-1986 11.5 National Accounts Summary at Constant 1980 Prices, 1978-1986 11.6 Implicit Deflators for National Accounts (1980-100), 1978-1986 LA These tables have been prepared according to standardized World Bank concepts and definitions to facilitate cross-country comparisons and aggregations. The data in the Standard Tablus may not always agree with similar data in the preceding tables. - 153 - Statistical Anex Table 1.1 IIOESIA COUNTRY ECONONIC REPORt Poputtion And Grwth Rates by Province, 1930-1965 ~~~~~~~~~~~~~.. ........... ..................... ................................. .. ........................ Population ('000) Average grawth rate (I p.o.) RegIon ......................................... ................................. 1930 1961 /a 1971 /a 1980 1965 1930-61 1961-71 1971-80 1980-85 Java 41,718 63,059 76,086 91.M7 99,853 1.3 1.9 2.0 1.8 ----~~~~~~~~... ........ ...... ------... ---- .......... ..... ........ ..--- . .. . . DKI Jakarta ' 811 2,973 4,579 6,503 7,886 4.3 4.4 4.0 3.9 Vest Java 10,56 17,615 21,624 27.454 30,830 1.7 2.1 2.? 2.3 Cntral Java 13,706 18,407 21.877 25,373 26.945 1.0 1.7 1.7 1.2 Di YogJakarto 1,559 2,241 2.489 2,751 2,930 1.2 1.1 1.1 1.3 East Ja 15,056 21,823 25,517 29,189 31,262 1.2 1.6 1.5 1.4 Stmtra 8,255 15.739 20.809 28,017 32,604 2.1 2.8 3.4 3.1 1 ~~~~~~~...... ------. .. . ....... ...... ------ . .. .. . ... .. . ...... . L-smg 361 1,668 2,777 4,625 5,906 5.1 5.2 5.8 5.0 Bngkulu 323 406 519 768 943 0.7 2.5 4.5 4.2 South Sumatra 1,378 2,773 3,441 4,630 5,370 2.3 2.2 3.4 3.0 Riau 493 1,235 1,642 2,169 2,548 3.0 2.9 3.1 3.3 JaIb 245 744 1,006 1,446 1,745 3.6 3.1 4.1 3.8 Vest Sumtra 1,910 2,319 2,73 3,407 3,698 0.6 1.9 2.2 1.7 North Sumatra 2,542 4,f5 6,622 8,361 9,422 2.2 2.9 2.6 2.4 Aceh 1,003 1,629 2,009 2,611 2,972 1.6 2.1 3.0 2.6 Kalimantan 2,170 4,102 5,155 6,723 7,722 2.1 2.3 3.0 2.8 ....... ..... -----.... ..... ...... ----- ..... .... ...... --- ---.. .. . .. . Vest imlintan 802 1,581 2,020 2,486 2,819 2.2 2.5 2.3 2.5 Central kaimntan 203 497 702 954 1,118 2.9 3.5 3.S 3.2 South Katflantan 836 1,473 1,699 2,065 2,273 1.6 1.4 2.2 1.9 East Ialiumntan 329 551 734 1,218 1,512 1.7 2.9 5.8 4.4 sulauesi 4,231 r,079 8,S28 10,409 11,554 1.7 1.9 2.2 2.1 .....~~~~~_; -.;;. . -----..... .. .... ... ....... ......... .. ........ ... ---. -- ... Central Sulawesi 390 693 914 1,290 1,511 1.9 2.8 3.9 3.2 North Sulawesi 748 1,310 1,719 2,115 2,313 1.8 2.8 2.3 1.8 South Sulaesi 2,657 4,517 5,181 6,062 6,610 1.7 1.4 1.8 1.7 Southeast Sulsuesi 436 559 714 942 1.120 0.6 2.S 3.1 3.5 Other Islands 4,219 7,106 8,630 11,071 12,316 1.7 2.0 2.8 2.2 ~~~~~~~~~~~.... ....... ..... ........ ...... ........ ...... ---. ... .... ... 3B1l 1,101 1,78M 2,120 2,470 2,649 1.6 1.7 1.7 1.4 West lta Tenara 1,016 1,808 2,203 2,725 2,995 1.9 2.0 2.4 1.9 East Nus Tengbara 1,344 1,967 2,2M5 2,737 3,061 1.2 1.6 2.0 2.3 Naluku 579 790 1,089 1,410 1,609 1.0 3.3 2.9 2.7 Irfun Jaya 179 758 923 1,174 1,371 4.8 2.0 2.7 3.2 East Timor n.a n. n.a 555 631 n.a n.a n.e 2.6 t o t a t Indonesia 60,593 97,085 119,208 147,490 164,049 1.5 2.1 2.4 2.2 /a Include sdJustment for the excltusn of rural Irian Jaya. Source: Central Bureau of Statistics, Population Cemus Reports, 1961, 1971, and 1960; Statistical Yearbook Of Indonesia, 1984; and SUPAS 1985. - 154 - Statistical Anex Table 1.2 IIESIA o3ITRT ECtN IC RPT Dfstribution of Population by Ag Gro wd Seu, 1961-1985 ...... .......... .. ........ ........... __......... ... ... t'OO) 1961 1971 1980 1965 ............... _............... ....................... ....... _..... .......... _. ..... ......... ............. Age Grows Nales F1t* Total Notes Flmes Total Notes FnatLe Total Pale Fmtes Total 0-4 6,529 $,69 17,171 9,675 9,560 19.235 10,872 10,422 21,294 11,006 10,543 21,551 5-9 7,744 7,701 1S,44S 9,593 9,302 1,695 10,899 10,446 21,335 11,31 10,739 22,117 10-14 4,353 3,892 8,245 7,406 6,875 14,281 9.179 6,525 17,704 10,7M9 10,113 20,69 15-19 3,85 3,905 7,770 5,627 5,779 11.406 7,552 7,806 15,356 6,335 $,232 16,567 20-24 3,40 4,373 7,653 3,627 6,461 8,03 6,010 7,055 13,065 6,.35 7,93 14,2 7,392 8,610 16,002 7,722 9,226 16,946 9,665 9,920 19,605 12,026 12,42 24,46 5,765 5,406 11,171 7.062 .,119 14,181 7,876 6,172 16,048 6,536 864 17,023 3,567 3.511 7,096 4,360 4,213 8,573 5,761 5,856 11,617 6,418 6,514 12,932 1.913 1,865 3,778 2,224 2,373 4,S97 3,297 3,354 6,651 4,150 4,474 6,624 1,183 1,245 2,426 1,450 1,539 2,989 2.200 2,593 4, 2,619 2,954 5,573 60 S7 117 7 a 1S 11 9 20 4 3 7 Total 47,671 49,214 97,085 58,753 60,455 119,206 73,332 74,158 147.490 1,6"4 82,402 164,046 ,,.. .... ....... , .,.,,,,,,,....... ....... ...... ....... .,......... ...... ......... ....... .......... ...... .............. ... ---------------------------------- --P ercentage distributin -------------- --------------------------- 0-4 17.6 17.6 17.7 16.5 15.6 16.1 14.6 14.1 14.4 13.5 12.6 13.1 5-9 16.2 15.6 15.9 16.3 15.4 1S.9 14.6 14.1 14.5 13.9 13.0 13.5 10-14 9.1 7.9 8.5 12.6 11.4 12.0 12.5 11.5 12.0 13.2 12.3 12.7. 15-19 6.1 7.9 8.0 9.6 9.6 9.6 10.3 10.5 10.4 10.2 10.0 10.1 20-24 7.3 8.9 8.1 6.2 7.4 6.8 6.2 9.5 8.9 7.8 9.6 6.7 25-34 15.4 17.5 16.5 13.1 15.3 14.2 13.2 13.4 13.3 14.7 15.1 14.9 35-4 12.0 11.0 11.5 12.0 11.6 11.9 10.7 11.0 10.9 10.5 10.3 10.4 45-54 7.5 7.1 7.3 7.4 7.0 7.2 7.9 7.9 7.9 7.9 7.9 7.9 55-64 4.0 3.8 3.9 3.8 3.9 3.9 4.5 4.5 4.5 5.1 5.4 5.3 65+ 2.5 2.5 2.5 2.5 2.5 2.5 3.0 3.5 3.2 3.2 3.6 3.4 Ulknou 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source s Central Burems of Statistfcs, Ceus Repo, 1961, 1971, 1980 nd IMS; Intercml Population Survey, 19. cM mimic ma ....................... EWopt by fin ind_try, 19-195 is ........................................................................................................................................ 1971 1960 19S2 1965 Nain Indostry iliton t mllion t illion X mitliln X Agrfculture, forestry, hu,tir * fishery 26.47 64.15 28.04 54.79 31.59 54.66 34.14 54.64 Nfnfni and qarrying 0.09 0.22 0.37 0.72 0.39 0.67 0.42 0.67 Nwtacturing 2.68 6.50 4.36 8.52 6.02 10.42 S.80 9.28 Electriecty, gs * water 0.04 0.10 0.08 0.16 0.06 0.10 0.07 0.11 Construntion 0.68 1.65 1.57 3.07 2.15 3.72 2.10 3.36 holesle and reteil trad & restarants 4.26 10.32 6.61 12.92 8.55 14.79 9.35 14.96 1 Tranportaton, storoe & commlcations 0.95 2.30 1.47 2.87 1.79 3.10 1.96 3.14 _ fince, insura , real estate & 0.09 0.22 0.23 0.45 0.11 0.19 0.25 0.40 O balnss services Pubtfc servies 4.12 9.99 7.74 15.12 7.13 12.34 8.32 13.32 1 Other 1.S8 4.56 0.71 1.39 0.00 0.00 0.07 0.11 Totel 41.26 100.00 51.18 100.00 57.79 100.00 62.48 100.00 /a Rfs to popiAtion 10 ar of dw *o ubo Wored§rfni the was pavios to the comm. Sosure: Contl masa of Statisties, Statiticl Tarbook of I1lnsosa, 1975, 1962, 19S5. i.rt et' - 156 - Statistical Anmex Table 2.1 INOUESIA COMTRY ErMNI IC RIPUT Gros Domestic Prodect by Iniutrifat Orign at Current Market Priees, 1978-1986 /a .. ........................ ........... ....................... .............. .._ (Rp. biltion) ......... . .......... ....................... ........ ................ .................. ........................................ ....... 1978 1979 1980 1961 1982 1963 1984 1985 1986/b Agreculture 6,744.7 9,374.0 11725.5 13,648.9 15,000.5 17,696.2 20,333.9 22,413.2 24,921.6 ......--- . ......................... ............ ............ ........ ............ ........ ............ ..... ...... ----- ................ Fa8m food crops 3,892.3 4,774.0 6,102.5 7,823.6 9,162.0 11,057.4 12,606.0 13,760.8 15,197.5 Far non-food crops 955.6 1,506.6 1,924.2 1,909.1 1,703.4 2,294.9 2,738.7 2,978.5 3,503.8 Estate crops 229.5 350.2 303.1 430.8 44.7 375.3 593.0 714.6 801.9 Livestock products 560.9 836.7 1,191.0 1,465.2 1,598.9 1,754.3 2,084.1 2,427.0 2,667.3 Forestry 620.0 1,283.9 1,412.1 1,041.8 973.5 994.2 939.0 938.0 972.5 Fishery 456.4 622.6 792.6 976.4 1,114.0 1,220.1 1,373.1 1,594.3 1,778.6 Nining nd quarrying 4,262.7 6,865.8 11,238.3 13,217.5 12,153.0 13,967.9 15,985.8 15,403.6 10,740.9 ,~~~~~~~- .. ....... ............. ... . ..... ......... . ........... ........ ............ ...... ...... ... Oil & natural gas 4,081.1 6,541.4 10,610.2 12,673.4 11,648.1 13,346.2 15,409.2 14,740.9 10,006.9 other 181.6 324.4 628.1 544.1 504.9 621.7 576.6 662.7 734.0 Manufacturing 2,816.3 4,002.9 6,353.4 7,066.8 7,482.3 8,211.3 11,081.6 12,676.1 13,899.9 ,................. ..... . ....... . ....... . ....... ........... ....... ........... ... ........ .. .... .. ... .... . Refinery oil 115.4 97.3 94.0 180.0 155.3 129.4 625.7 1,635.2 1,857.8 LNG 199.8 581.6 1,198.4 1,282.0 1,615.4 1,871.2 2,7C6.7 2,423.7 2,322.6 Other 2,501.1 3,324.0 5,061.0 5,604.8 5,711.6 6,210.7 7,749.2 8,617.2 9,719.3 Etlectricity, gas w water 128.0 129.6 230.6 291.9 340.5 524.3 655.2 781.3 856.0 Constructfon 1,370.7 1,945.4 2,582.4 3,500.1 3,769.1 4,597.2 4,756.8 5,301.8 5,242.6 Trade 3,321.9 5,029.5 ? 'Ut.8 8,955.S 10,179.4 12,009.4 13,973.5 14,697.5 16,081.2 ..... ........ .. .. ... .... ... .... ......... ... .... . ... .... . ..----... .......... . ...... .... ...... . Retait & haolesalo trade 2,685.2 4,220.9 6,3t4.1 7,761.1 8,709.1 10,411.7 12,063.5 12,666.0 13,877.7 Hotels & restaurants 636.7 808.6 1,008.7 1,194.4 1,380.3 1,597.7 1,910.0 2,031.5 2,203.5 Transport & conm nications 1,233.7 1,680.7 2,210.7 2,370.4 3,163.5 3,978.0 5,112.5 6,050.5 6,392.0 .....................------- ....... -----.-................................................ Transport 1,166.S 1,567.6 2,060.4 2,182.3 2,941.9 3,693.7 4,611 3 5,538.5 5,722.0 Coummcations 67.2 113.1 150.3 188.1 221.6 284.3 501.2 512.0 670.0 H fnking, etc. 470.0 m7. 924.4 1,574.2 1,782.8 2,039.2 2,691.8 2,802.4 3,279.5 Owership of d.eltlngs 703.1 959.7 1,227.9 1,494.1 1,731.1 1,961.8 2,275.9 2,443.0 2,631.5 Pubtlic edInfstration & Defence 1,765.6 2,098.5 3,225.4 4,203.3 4,705.5 5,711.5 6,469.9 7,925.1 8,307.3 Other services 1,185.8 1,485.5 1,872.1 2,098.6 2,338.8 3,000.8 3,717.9 3,90D.6 4,134.8 Gross Dometic Product 24,002.5 34,344.7 48,913.5 58,421.3 62,646.5 73,697.6 87,054.8 94,493.1 96,489.3 -------Wsu ---un= oaon m m- mwzu m /a The ne national accmt rseres is besed tmn a frme uich is consistent with the 1980 Input-Output tabte, uxdted to 1963 throsgh the Incorporation of ne fnformtion frm surves. /b Preliminry figure. Sorc a Central turea of Statiftics. - 157 - Statistical Annex Table 2.2 INDONESIA CMoUTtY EC00oNIC REPORT ......... .......... Gross Domestic Prodcwt by Inrstriat Origin at Constant 1963 Market Prices, 1978-1966 ~~~~~.. *_........... .. ......... ... ... . ................. ..................... (Rp. billion) ........ ............................ .......................... .... ...... ................................................ 1978 1919 1980 1981 1982 1963 1984 1985 1986 /a ....... ............ ............ ............. ............................ ......... .................. .......................... ..................................... .. Agricultur 14,381.2 15,338.1 16,399.2 17,187.0 1T,370.9 17,696.2 18,431.1 19,209.0 19,687.0 ......... ............... ..... ..... -----....... .............. ..... Farm food crops 8,399.8 8,65S.9 9,661.1 10,639.1 10,736.0 11,057.4 11,598.7 11,894.6 12,116.5 Far non-food crops 1,442.5 1,659.2 1,837.1 2,010.0 2,033.3 2,294.9 2,349.3 2,575.7 2,722.2 Estate crqps 437.6 469.7 497.9 517.6 592.4 375.3 445.5 510.8 511.8 Livestock products 1,247.6 1,440.3 1,585.9 1,620.6 1,695.8 1,754.3 1,690.1 2,036.5 2,097.0 Forestry 1,871.2 1,867.2 1,700.9 1,260.6 1,146.4 994.2 694.4 850.7 841.6 Fishery 962.5 1,045.8 1,116.3 1,139.1 1,167.0 1,220.1 1,253.1 1,340.7 1,397.9 Minfng & quarrying 16,363.8 16,092.6 16,077.8 16,340.1 13,876.2 13,967.9 14,788.7 13,960.5 14,572.0 .................. . ........ ..................-.------......... .................._................ oil & natural Was 15,923.0 15,590.2 15,524.7 15,767.2 13,249.0 13,346.2 14,203.4 13,368.7 13,936.4 other 440.8 502.4 553.1 572.9 627.2 621.7 585.3 611.8 635.6 ; .Nwfacturing 5,107.5 5,952.0 7,304.4 7,878.4 7,973.1 8,211.3 9,710.3 10,589.6 11,161.5 ............. . - . ...... ...... ....... ---- ...... ..... ....... ........ ........ Ref nery oil 147.8 172.7 185.8 169.6 142.3 129.4 386.5 670.4 897.9 LNG 725.1 1,230.0 1,671.9 1,711.6 1,781.7 1,871.2 2,190.2 2,918.5 2,922.8 Other 4,234.6 4,549.3 5,446.7 5,997.0 6,049.1 6,210.7 6,S93.6 7,000.7 7,340.8 Electrictty, gas and toter 243.7 265.2 312.1 360.8 421.6 524.3 550.3 594.9 633.7 Construction 2,904.1 3,265.5 3,849.8 4,367.9 4,408.5 4,597.2 4,393.8 4,508.0 4,497.6 Trade 8,231.6 8,933.7 10,112.4 10,949.5 11,756.5 12,009.4 12,159.7 12,456.1 12,730.3 Retail & whole sLe trade 6,887.3 7,547.1 8,628.1 9,417.5 10,210.1 10,411.7 10,451.5 10,712.9 10,963.2 Hotels & restaurants 1,344.3 1,386.6 1,484.3 1,532.0 1,546.4 1,597.7 1,708.2 1,743.2 1,76T.1 Transport & comifeations 2,505.8 2,670.0 2,910.5 3,309.3 3,539.6 3,978.0 4,442.4 4,481.8 4,541.6 ........ .............................. ... .... ---- ....... ........... ....... ........... ....... ........... ........... .. Trunport 2,366.3 2,s13.4 2,22.1 3,083.1 3,276.4 3,693.7 4,008.1 4,031.8 4,074.1 Comunmeations 139.5 156.6 188.4 226.2 263.& 24,3 434.3 450.0 467.5 lankng, etc. 1,121.5 1,343.7 1,234.0 1,940.7 2,034.9 2,039.2 2,422.3 2,430.6 2,558.5 Ounershfp of dwlling 1,461.7 1,573.1 1,683.0 1.622.? 1,876.9 1,961.8 2,072.3 2,145.2 2,220.7 Public *denistration & detence 3,385.2 3,762.2 4,128.3 4,664.6 S,2"6.0 5,711.5 5,996.7 6,438.5 6,601.4 Other services 2,483.8 2,sso.9 2,663.3 2,792.1 2,851.0 3,000.8 3,116.8 3,180.2 3,270.2 Gross Do mestic Product 58,169.9 61,m.0 66,674.8 71,613.1 71,377.2 73,697.6 76,144.4 80,014.4 82,474.5 ,............. ............................ ..... ......... .................. ........................................... /a Preliminary figure. Source : Central Sureau of Statistics. IUUEIA CN E 'C AM ....................... lEpefftue an MP at oCurt t Nket Prim, 197I198 ................................................................................................_ (. blUlon) ................................................................................................................................. 1974 19 190 196 13 195 194 15 l9J6 /b ................................................................................................................................. Private coumptfon 15,125.5 19,516.3 25,594.9 32,23.0 37,923.7 4,739.3 51,33.9 56,857.9 61,682.4 Cowmmnt cwissitfan 2,556.5 3,277.4 5,147.7 6,452.0 7,22B.7 8,077.3 9,121.5 10,893.1 11,328.7 Gros ffxed invesnt 7,494.1 7,667.8 10,549.8 14,134.5 15,822.4 16,973.8 19,625.2 19,618.3 20,042.6 X Chwes In stock /a 3,259.6 1,481.7 1,344.7 3,174.7 1,418.6 2,694.7 2,551.5 5,290.2 5,250.5 1 Exports of goods and nfactor servfes 5,316.7 10,147.5 16,162.2 16,401.5 15,324.5 20,4U.? 22,964.9 21,671.1 20,041.7 Less: IWorts of good and nmnfctor services 4,729.9 7,746.0 9,885.6 14,034.4 15,071.4 21,25.1 18,627.2 19,857.5 21,656.6 Gross Domstic Prouct 24,002.5 34,344.7 48,913.5 56,421.3 62,646.S 73,697.6 87,054.8 94,493.1 96,489.3 ................................................................................................................................. la maidl. CA0 /b Prel lminr flgures. Sauce: Central Buree of Statistfcs. m UTI EalIC iNPUT ....................... Epeditue an OP at Cuwtent 19M Nrket Pries, 1976-1986 ....... ............ .........................................@vo (tp. billion) 1976 1979 19K 191 1962 19K 1964 195 1966 /b ........ .............. ......... .................. ..... ....... ..... ....... .. ...... ...... .. ............... Privato cOMPAtion 29,648.1 32,491.4 36,037.0 39,698.9 42,171.5 44,739.3 46,896.3 46,040.9 49,637.6 Goven usnt coImApticn 5,128.0 5,743.3 6,674.0 7,550.7 6,230.3 6,077.3 6,353.0 S,975.1 6,968.4 Groa fixed investment 11,289.1 12,31.6 15,646.0 17,656.7 16,740.3 16,973.8 17,647.5 16,766.1 16,933.0 _ Chws In stock is (136.6) (103.3) (3,196.6) 5,138.2 2,SB1.6 2,694.7 1,027.3 4,311.0 2,420.6 Expowt of goo an mmfactor services 24,254.9 24,810.4 26,182.0 21,456.7 19,524.1 20,447.7 20,562.6 16,915.1 2,50s3.9 Les: 1ot of good wi nanfwctor vicess 12,193.6 13,546.6 14865.6 19,890.1 20,170.6 21,235.1 16,544.3 16,995.6 17,009.2 Gross Dmtic Product 58,169.9 61,M.0 66,674.8 71,613.1 71,377.2 73,697.6 78,144.4 60,014.4 2,474.5 ... ...,.. ,,.... ,........ ................ ........ ................ *........ ................ ........ ................ ... .... * ...... -"@ *** /a Residatl. /b Preltmnary fimU . to Source: Central Surm of Statistics. tOM. W COCU"T ECMM0"C REPOR Ofstribwtion of GOP at Current Narket Prices, 1978-19M6 ....................................................... (2) ......... ............................ ........................................................................................... 1978 1979 1960 1981 1962 1963 1964 1965 1966 /a Economc se ctors ................ Agriculture, forestry, fishery end livestock 26.1 27.3 24.0 23.4 23.9 24.0 23.4 23.7 25.8 Nfning 17.8 20.0 23.0 22.6 19.4 19.0 18.4 16.3 11.1 XNowfwturing lt.7 11.7 13.0 12.1 11.9 11.1 12.7 13.4 14.4 Etectricity, gs mnd water 0.5 0.4 0.5 0.5 0.5 0.7 0.8 0.8 0.9 Constructfon 5.7 5.7 5.3 6.0 6.0 6.2 5.S 5.6 5.4 Trensport a communications 5.1 4.9 4.5 4.1 5.0 5.4 5.9 6.4 6.6 other servfces 31.0 30.1 29.8 31.4 33.1 33.5 33.5 33.7 35.7 Gross Oomeatic Product 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ..,,,.................... . ...... .. ..... ....... ..... ....... ..... ....... ..... .............. .... .... ._... .. Expenditure categories . ..................... Private consusption 63.0 56.8 52.3 55.3 60.5 60.7 59.0 60.2 63.9 Governrent crnsmptfan 10.7 9.5 10.5 11.0 11.5 11.0 10.5 11.5 1l.7 Gross dbestlc investment 23.9 26.6 24.3 29.6 27.5 29.4 25.5 26.4 26.2 Net exports 2.4 7.0 12.8 4.1 0.4 -1.1 5.0 1.9 -1.9 Gross Domestic Prodhct 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ...................... ..... ..... .._. ..... ..... ..... ..... ..... ..... g x 0rt .............................................................................................................. m I-rt /a Preliminary figures. Source: Tables 2.1 ard 2.3. I- 11 ~~~~~~~~~~~~~~~~~~~~~~ IDOIIESIU COMNIRY EIOONVIC REPORT Distribution of GDP at Conctant 1983 Narket Pries, 1978-1986 ............................................................. CZ) 197 1979 1960 1981 1962 1983 194 1965 196 /a Econome Sectors Agrtiulture, forestry, 24.7 24.8 24.6 24.0 24.3 24.0 23.6 24.0 23.9 fishery and ltvastock NinIng 28.1 26.0 24.1 22.8 19.4 19.0 18.9 17.5 17.7 1 Nusifecturing 8.8 9.6 11.0 11.0 11.2 11.1 12.5 13.2 13.5 Electricity, gS wnd uater 0.4 0.4 0.5 0.5 0.6 0.7 0.7 0.7 0.8 a% Construction 5.0 5.3 5.8 6.1 6.2 6.2 5.6 5.6 5.5 Transport & ceammunfetions 4.3 4.3 4.4 4.6 S.0 5.4 5.7 5.6 S.5 I Other services 28.7 29.5 29.7 31.0 33.3 33.5 33.0 33.3 33.2 Gross Domestic Product 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Expenditure catepries ........ ........................ Private eonsuption 51.3 52.6 54.0 55.4 59.1 60.7 60.0 60.0 A0.2 Govermemnt consuption 8.8 9.3 10.3 10.5 11.5 11.0 10.7 11.2 10.9 Gross dbmstic inwestment 19.2 19.9 18.7 31.8 30.3 29.4 24.2 26.3 23.5 Net exports 20.7 18.2 17.0 2.2 -0.9 -1.1 5.1 2.4 5.4 Gross Domestic Product 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 /a Pretiminary figurem. Source: Tables 2.2 and 2.4. atlsnn° of Paumwts, 1974/75 - W967ON .................................................................................................................................................... 1974/75 1975/76 1976M77 19M7M/ 1978/79 1979/0 1980/81 1961/82 19P43 ¶983/84 19MS/5S 196 S I96/87 19S7/6S /c .................................. ....................................................................................................................................................... _ 1. Net oil exports /a 2,638 3,138 3,710 4,352 3,785 6,308 9,345 8,379 S,78 6,016 5,845 4,004 1,426 2,215 2.etLi inxports/a 0 0 0 93 225 667 1,256 1,382 1,378 1,355 1,971 2,119 1,158 1,290 3. onof xports (net) -2776 -3972 -4512 -5135 -5165 -4m -8470 -12551 -14205 -11522 -9784 -7955 -6635 -5190 Exorts, fob 2;033 1,673 2.863 3,50i 3,979 6,171 5,58i 4.170 3,928 5,357 5,907 6;175 6731 i;9054 loports, clf -4341 -5090 -6167 -7241 -7543 -9028 -11837 -14561 -15824 -14346 -12921 -11186 -10385 -11267 Services (nonfreight) -448 -755 -1208 -1401 -1601 -1920 -2220 -2160 -2309 -2543 -2770 -2944 -91 -2977 4. Current account (1*2#3) -138 -834 S02 690 1155 2,196 2,131 2790 7039 -4151 196B -1832 .4051 1615 5. SDRs 6. Official capital disbursements 660 1,995 1,823 2,106 2,101 2,690 2,684 3,521 5,011 5,793 3,519 3,432 5,472 4,060 ........................... ... ..... ..... ..... ..... ---- - .... ..... ----- ..... ..... -... ..... ..... 16181 513 945 1,596 1,694 1.567 2,237 2,406 2,415 2.905 4,255 3,189 2,751 3,475 3,368 Program ad 180 74 147 157 94 239 118 50 21 84 52 38 48 40 Project aid 333 871 1,49 1,537 1,473 1.998 2,288 2,365 2,884 4,171 3,137 2,713 3,427 3,328 o OA 333 482 513 661 814 1,106 1,299 996 1,356 1,902 1,442 1,332 1,932 2,264 lNw-DA 0 389 936 876 659 892 989 1,369 1,528 2,269 1,695 1,381 1,495 1,064 Mon-CII 147 1 227 412 534 453 278 1,106 2,106 1,538 330 681 1,997 692 Cah leon 0 1,049 0 0 0 0 0 0 0 0 0 0 0 0 7. mrtizatfon -89 -77 -166 -761 -632 -692 -615 -809 -926 -1010 -1M -1644 -2129 -2692 S. Other capotal (net) -131 -1075 38 176 542 -1312 361 I,140 1'95 1,191 499 572 1,232 1,179 Direct lnvestamnt 538 44 281 285 i71 217 140 142 311 193 245 299 252 327 Ofl sector 13 14 -32 -50 75 -1237 -685 791 1,322 ns n.a n.e n.e n.a Other -62 -1543 -217 -59 196 -292 184 207 162 998 254 273 960 S52 9. Total (4 throgh 8) 302 9 893 831 856 2,884 3,839 1,062 -1159 1,823 758 528 524 862 10. Errors id omfsso1ns -311 -353 108 -180 -62 -1256 -1165 -2050 -2121 247 -91 -498 -1262 499 11. Nnotary mhvmet /b 9 34 -1001 -651 -794 -1628 -2674 988 3,280 -2070 -667 -30 738 -1361 13 Ca ............................................................................................................................ ....................g /a Broom exwport tm 1qports of god and sorvices of the oll and LNG sector respecti vety. lb A neative mammt refers to an acctalstion of assets. w co /c Proltmnary filgre.s source: Bank Indbne ie. WaiTEM IW IC tEowT !-... .......... Non-oi° Exports. 19611812 197/U ................................................................................................................................................................. Value (U S millton) Voltum ('000 ton) ii61ii 196ii2/5 1965/64 1'964/85 196t5/66 19W/SiT 1967/U/ai 1961/62''1962/5 1'963/64 1964/65 1'965/J6''19WS6jT 967/U/ai ........................................................................................................ ........................................................................................................................ ............................ Agricultural 2.930 2.Mn2 3.662 3,663 3,:8 4 5,292 ........ . . ............ ........... ..... ....... ..... ....... .... ...... -----....... .... w 16 1, 1.21 1, 21 66 41, 5, 5,8 aooakeuf y I n.e n.o n.e n. n. :.e n. ier 656 66 B00 7o m 800 1.n692 air Nemfec˘turod m 530 905 1,4 1,595 1,611 2,9s ........ ... ... ... ... ... . ..... ... UnTre zli m~~~~~~~~~~~~~~ne n.e n.a n.a n.e n.e n.e Total rhn-@1 Ed ports 4.170 3,928 5,367 19611 660 ............ . .... ....... .... . ..... ...... .. .. s.....rD /a PrelImInary figure.. w Soue:Use InI on PE Export Delaration Fom) . A) tiefel n:G n.s n': U U~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I IEMSIA WAI,R El,IC,,,T Value of Eapew by PrIncI pel Cmntry of DemtirmtIn, 1974-19 (UN mlltion . ................................................................................................................................................................ CAmtrin 1974 1R5 1976 19 7 1978 1979 1980 1981 1962 196 1964 19S 19 1967 is ................................................................................................................................................................. Learn 644.9 72.1 756.2 1,154.9 1,477.9 2,22.5 3,053.6 3,414.1 3,499.1 3,476.3 2,487.3 1,92.2 1,514.9 1,378.3 t|3W 3 X X } ~~~~~4: 1 4g10 A:t4 2.34 2.4-g 3,4 0 3.4 1 2,11:1 1.4.- 1 .40 -14 3,. 3,1.1 3,10.} 4.fi 41#: 7'.1 r 12.j011:1§3 ff§1l$tt- l - Africe 23. 2.5 20.1 30.1 37.0 32.1 56.1 36.8 56.8 78.8 139.6 160.4 179.3 129.3 g>Serle 1' #.9 ~~1'J3:1 2.:I:l 3S50j:j 2,9;N.l 3,.j:f 4,9fi:i 4:9-t: 3.911 4 o2,9 4:032 4.3g.2: 2,19p Z,l.& errresle~~9: 2 : 3 6V: 11: S s:8 13:8 WI FA a WA I R8 2f 118: 2 11 1:9 I EEC 390.6 404.8 619.8 919.4 67.9 1,173.0 1,387.? 1,062.7 893.7 952.7 1,036.1 1,113.0 1,339.7 1,195.0 Ti '~~~~~~~~~2:I II~~~~~~~I I'I rh"tn'wW !N:f 910 "A A P 11 H 10:l INt AN 11 21 A1T IM I 21 11 Total 7!426.3 7,102.5 6,546.5 10,852.? 11.643.2 15,590.1 n3,950.4 253,14.5 22,326.3 21,145.9 21,887.6 18,564.7 14,5=0 13,959.6 ....... .................... .................................................................................................................................................. /a Preliminary figures through October 1987. Source: Ctratl Bureau of Statliocs. rt CommR EUcNIc ESPOT ..................... Vatuw fImports by PrIncIp!!L Cmmtro0,1m19416 (US mitlloen) CouRtrin 1974 17 1976 1977 197 1979 10 1961 1966 19 1964 is lWS 196 196 /b ..................... 595 .... 125 ---M .4----M.I.... 652.0...... S.9... 1,50.4" ' - ... 3,1.6.......... 1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ no 1.s.7 412.1 .4 66.1 42.0 3.9 1,50.4 1,702.1 3,301.6 3.914. 1,9.0 94.4 1,120.9 1,141.2 pnr3W SC 4 1 -it{0ttt:I4i20|3t - 0}X Africa 24.5 108.1 s5.6 29.0 66.9 131.7 130.4 252.2 201.5 134.8 171.4 160.3 102.9 17.9 s r ffi~~~~~~1: 12 1 jj lj: 1:2° I. 1. I,MS° 2 %g 2@ S^1:1+* 2.1: I. :j 1.1:1 6 :1 EEC 743.3 88S.1 1,204.1 1,296.0 1,267.4 1,073.7 1,444. 2,200.0 2,655.9 2,234.1 2,061.9 1,706.1 1,19S.S 1,904.4 r 11 X,{ X,! %t X! 1,{ 1.t ''l 51 11 | X1 I .t 0 nurw,opa 1 1 2 0 12 - 124 AM 21 2L1 : JU d:o 6S 41431 :1 10260 437 AN ,o,tat s3,81.9 4,769.6 5,673.1 6,230.3 6,690.4 7,20.5 10,534.4 13,272.1 16,5.9 16.3518 13,6.1 IOI25.:! 1071.94. m..m..:. ..................................................................................................................................................... %g Slaw 1 C4 ~ b Jlub Ifg tjI iWf ng dats in the oit sitor. Sswce: Cuntral tures of Statistics. 0.g r ................. OWMTRY EWUwn.C EPOR.T Oll bltnc. of Psonts, tr1976m - 196/8 ................ ................... ...................... (USIot Ill Iln) .......... .................. @o*wws@............................ *ve6*orv*Zo*w.*sw***@@@w* ....................................................................................................... ^o* 1976/7 19s/7 1973/9 1979/0 190/ 198182 198V/ 1936 14/S 10 5 /6 1968 " s /Wi V.u (,171.( 6,56s.7 10904. 15,116.6 16,i i.S 12,233.1 12050 ..4 .,816.4 4.1 2.4 o IS $ $ ˘ " ) ~~~~~~1:,10. 12,,96 I2 ,, : 1:1 1: I 1:1 J. ,M,fi . , 1# 1,o: .j5: V,S 1 2 3*00i* ,, 2. laports, elf -1906.0 -1640.0 -1829.4 -2844.6 -410.2 -5278.0 -465.2 -3599.2 -2866.1 -2510.2 -2166.7 -2401.3 M ^l^' 2t'M ....- .. ...... .... .... ..... ..... .......} .... ..... ......! l ! -. .... .... 3. S,rvices -692.1 -1200.0 -1254.1 -1871.9 12L9O 2U4.8 -1849.r 243.0 -1914.5 -2302.0 -205 -1416.2 .................~~..... ....... . .. ........ .. ...... . .......... ....... .......... ....... .......... ....... . ......... ....... .. ... 4. retT c-unt C1*2+3) 3; .6 4.t 11.7 37. M 2 .8 9 63 5 .2 04 2,387.3 5. NI ecellansoum capItal -710.3 -196.4 10.5 -964.3 -6S9.2 300.1 554.0 331.6 26.8 323.3 1:119.5 29.6 ............ .......... ............ ...... ...... ....... ..... ....... ... ...... ... ...... ..... ....... ..... ..... MM M ... -710.3 -196.0 ".4A C?ciittcruetd*j1 1 X to f cruds: /d - J E J All 6. Totat (4*5) 2,999.3 4,153.3 3,795.9 5,403.S 8,60.2 8,678.8 6,342.2 6,347.8 6 0*9.6 4,327.5 2,460.2 3*116.9 .... w....... ....... ....... ....... ....... ....... ....... ....... .... .. ....... ....... . ... 7. Errors nd omIssions -S0.3 1S.0 39.2 182.6 -65.6 792.1 254.5 121.5 972.7 804.7 271.3 147.3 8. lonstary fomewnts *2949.0 -4168.3 -383S.1 -S556.1 -6619.6 -9470.9 -6596.? -6469.3 -702.3 -S132.2 -2576.S -3264.2 .................................................. .................................................................................................................................................... %g Sti n lure MOts of $1,016.0 *illten In 1979/80, $1,099.8 million In 1980/81, $1,849.0 dltion In 1981/82, no nary'> lTdFe Kalt . rtiL ofpr 1 2 W x hgs ~t r n 'e dlw to c. debt since Apr1t 1, 1977. e Source: 1ank I 1ner 1s. 0 COUNT ECOINNC EMT ......................... LUGbulnc.of ~nUSS 197/f l - 19788 ,....................................................................... .............................................. 1977/78 19/ 1979/80 1960/81 1961/82 192/83 1963/84 1984/85 195/86 19M6U87 1 I7/86 /b ...................................................................................................................... 1. Eqports, fob 161.7 516.2 1,345.3 2,110.5 2,342.6 2,46.1 2,398.9 3,368.9 3,621.0 2,168.0 2,537.2 tue0§IPU} ............ ..... ..... ..... .... .... .... .... .... ..... .... .......7 7 77s7 : Freight 27.2 68.1 165.7 -210.0 -245.2 -228.7 -223.1 -236.9 -228.2 -245.0 -296.2 Eiyorte, cu 188.9 604.3 1,511.0 2,320.4 2,587.8 2,689.8 2,622.0 3,605.8 3,849.2 2,413.0 2,835.4 ....... .............................. ..... ........ ....... ....... ....... ....... ....... ....... ....... ............. 2. to -17.0 -52.8 -95.4 -136.3 -129.1 -156.7 -237.4 -211.3 -211.8 -204.4 -201.6 3. Servicm -52.2 -238.8 -S82.7 -718.6 -831.3 -926.9 -807.0 -1186.5 -1290.1 -805.4 -1026.6 ......... ..... ...... ...... ...... ...... ...... ...... ...... ...... .....:. ... 4. Current account (1*2*3) 92.5 224.6 467.2 1,255.6 1.382.2 1,377.5 1,354.5 l9?.l 2,119.1 1,158.2 1,309:0 S. Nftellaneous caital -79.0 -146.6 -334.8 -149.6 -190.4 -168.7 -227.2 -513.1 -473.3 -400.1 -442.8 DL e btj§ILI -29.7 -96.7 -140.4 -238.0 -167.1 -172.6 -195.4 -479.1 -459.4 -420.7 -47.6 -49.3 -49.9 -194.4 86.4 -23.3 3.9 -31.8 -34.0 -13.9 20.6 14.8 6. Totat (4S) 13.5 78.0 332.4 1,106.0 1,191.8 1,208.8 1,127.3 1,458.0 1,645.8 758.1 866.2 7. Errors and ausslons 13.9 1.5 -23.5 -102.6 -52.6 -49.3 -254.5 -344.9 -361.0 -109.9 -128.0 8. Nonotary movmeenta -27.4 -79.5 -308.9 -1003.4 -1139.2 -1159.5 -872.8 -1113.1 -1284.8 -648.2 -738.2 ...................................................................................................................... Source: Bank Irdoesila. -168 - Statistical Aninex Table 4.1 II0UESIA CODENY ECOIUIC KNIT !&Mry f Externol Debt Data, 1976-196 /a 1976 1977 1976 1979 1960 1961 1982 1963 1964 1965 1966 1967 External debt data ...................(Us S wit il---------- n---- ------ Disbursed wnd outstwdfng debt (DOD) jb 10,002 11,670 13,150 13,276 14,97 15670 16,514 21,654 22,355 26,863 32,651 41,284 Totat debt outstanding, including widlsbwse (100) lb14,575 16,197 19,037r 21,202 22,452 27,210 32,226 35,56? 36,567 42,493 49,769 59,! Commtmntunts 3,133 1,721 3,285 4,101 4,277 5,2667,4572 478 416 401S, Gross disbursements 2,332 1,9S9 2,215 1,667 2,551 2,673 4,191 4,929 3,604 3,615 4,119 5,j met disbursmrnts 1,696 1,136 667 559 1,615 1,621 3,089 3,64 2,19 1,26 1,76 2, mot resource trwasfers 1.572 696 I53 -212 M9 626 1945 2,36 564 376 -260 -1 PuMic debt service 76. Mf202 f.175 4 2,24 2,54 3,24 3,99 4,37 5 Pubtfic debt sermice 761 1,262 2,062 2,099 1,759 2,047 2l! 246 54 M,40 3N9M 439 , etega/mutt lateat I it ,I'm OR31,1 1319 JR M: A:4$1 3:W9 1:9 1:1L Disbursement indfcators................).... .. .................... Undfsbured debt/TDD lb 31 28 31 37 33 42 43 39 39 37 3 31 Gross dislbursements/comaitments 74 114 67 46 60 S1 59 66 60 66 101 100 fl~~~ate;aL/mJlti lateral i i a 1 Gross dfsburse.ents/undisbursed debtandcoinitmenta/d ~34 31 26 19 21 21 2 25 2020 1 Not disbuirsements/gross diss 61 se 30 30 63 61 74 74 se635 43 "wa;,r*i;wMGi ....... i ii . W i e I /R glti lateral Daa in ths A~e refer to &Wi sector indiumw I oeI .on t tof l hess ar r /b ~di~5fat exp oon, LFWIparaxyLene proictjInW ru4freAsm nLOthan UW year;O %~~~ ~ ~ ~ ~loentW rnanc atl do;, Ptu fmtet n orc:ImD Debtor lepwrtfng System, base an dota pravided by Uai* I dmi esi. - 169 - Statistical Annex Table 4.2 Page 1 of 2 INDOESIA CUNMTRY ECONONIC REPORT Exterwst Pubtic Debt Outsttnding as ot DecOemr 31, 1967 ............ ........................ .. ........ (USS '000) Typ of crdf tor/ Debt outstanding Major reported Creditor country ........................-- new coemitments Dlsbursed Undisbur ad Total Jan 1-Dec 31 1987 Suppliers' credits .................. France 2,816 0 2,816 0 Japen 4,668,418 2,341,311 7,009.729 21,231 Kore, Rep. of 48,629 a 48,629 0 Pakistan 8,877 0 8,877 0 Switlerland 1,275 0 1,275 0 United KIngda 1,945 0 1,945 0 United States 2,598 133 2,731 0 Tuosleavf 23,734 0 23,734 0 Totel suppliers' credits 4,758,29M 2,341,444 7,099,736 21,231 FInwcIel institutions Autria 72,752 38 865 111,617 16.575 kltuium 85,S92 116,986 202,578 45.199 Finland 0 14,500 14,500 14,500 From 985,952 459W385 1,445,337 0 Geramny, Fed. Rep. of 381.903 58,357 440,260 0 Hons Kong 594,506 852,430 1,446,936 473,346 Itaty 3,142 0 3,142 0 Japan 3,953,760 577,587 4,531,347 198,521 Netherlands 362,116 308,887 671,003 29,300 Norway 25,636 0 25,636 0 SInapore 370,567 199 370,766 0 Sweden 133,756 71,291 205,047 0 Sultzerland 28,765 79,812 108,577 0 United Kingdo 1,325,249 517,360 1,942,609 97,404 United States 1,878,974 0 1,878,974 0 NultipLe nder 50,000 700,000 750,000 0 Total financial ._............. institutions 10,252,670 3,795,659 14,048,329 87,K847 ............ .......... . ...... ......... . .......... . ..... ........ ........ .................... Bonds Gerony, Fed. Rep. of 63,231 0 63.231 0 Jqapn 242,917 0 242,917 0 KsKuait ,440 0 7,440 0 Netherlands 42,194 0 42,194 0 S1di Arabia 75,000 0 75,000 0 Switzerland 192,500 0 192,S00 0 United Kin*waz 250,000 0 250,000 0 United States 300,000 0 300,000 0 Total Sonds 1,173,282 0 1,173,282 0 Mationstizatlon ............... NetherlwdB 158,650 0 158,650 0 Total natlonslitation 158,650 0 158,650 0 - 170 - Statistical Amex Table 4.2 Page 2 of 2 INDONESIA COUTRY ECONOMIC REPORT ........... .................... External Pskifc Debt Outstading as of Deember 31, 197 ....... ............ ........... ........... ......................... (UsS '000) Type of craditor/ Debt outstanding Major reported Creditor country --------------------------------------- neu omitments Di bursed Undisbursed Total Jan 1-DOe 31 196W ............ ........................ .......... ..................... ............................... .................................. .................... Nultilter al loans .................. ADB 1,328,361 2,308,507 3,636,868 444082 EEC 4,678 0 4,678 0 IBRD 7,390,769 4,035,951 11,426,720 1,418,000 IDA 865,479 5S,648 61,127 0 IFAD 39,737 59,260 96,997 0 lotmic Devlopment Bank 1,064 9,838 10,902 0 Total aulttlateral loans 9.630,088 6,419,204 16,049,292 1,858,482 ........................ .................... ........... ------ ............... .. .. ..... .......... .......... .... Bilateral louis ............... Australfa 26,496 6,500 32,996 0 Austrif 86,277 32,515 120.792 0 etlgisu 95,946 10,557 106,503 a Bultarf 1,243 0 1,243 0 Canada 306,645 184,m 491,417 0 China 63,629 0 83,629 0 Czehoslovakia *1,467 0 41,467 0 Denark 60,698 1,793 62.491 0 Egypt, Arab Rep. of 1,912 0 1,912 0 Frano 477.062 201,421 673,483 0 Gnnarny, Fed. Rep of 2,063,113 435,862 2,498,975 131,673 Geromny, Dem. Rep of 34,102 0 34,102 0 Hineary 10,343 0 10,343 0 Indfa 42,183 6,455 48,638 0 Iran 10,503 24 10,527 0 Italy 56,207 47 56,254 0 Japan 7,643,224 3,815,612 11,456,836 2,168,263 Kuemt 65,988 66,121 134.109 0 Netherlsnds 68,397 159,746 1,008,143 37,160 ev Zealand 1,548 0 1,548 0 Pakistan 4,644 0 4,644 0 Poland 58,243 0 58.243 0 lomwnis 8,351 0 6,351 0 Saudi Arabfa 54,806 128,479 163,285 19,226 Spain 212,185 47 212,232 0 Switzerland 0 39,906 39,906 0 United Arab Emirate 8.121 1,713 9,834 0 United Kingdom 43,317 117,07 160,324 0 United States 2,377,225 753,313 3,130,536 151,050 USSR 462,064 0 462.064 0 TWgo l via 69.811 0 69.811 0 Multiple lenders 53,468 0 53,468 0 Total bilateral loans 15,311,218 5,93.690 21,275,108 2,507.672 Tota external pebifc debt 41,264,200 16,520,197 59,804.397 5,262,432 .............. ............................. R ............................... swimc: IM DeWbtor Repwrtfng System, BsedW anr o'ta p wil by W Ir I.. 1 liVOEIA ccumm ECONwIC wcui ,........................ Srfvio Pswmts, Cm1tmint, Dlfbursk snts wid outstandinrg AMunts ct External Publtf Debt .................. .................... .................. _......................................... cm "000) .............. ........................................... ............................................................................................ Debt outstanding at end of period Transactfons during period Other changes Year --------.--- - Disbursed including Commit- Disburse- Servfce payments Cancel- AdJust- only undisbursed ments ments ---------------------------------... tat ions ments /a Principol Interest Total ..-......................................................................................... Actual 1978 13,149,657 19,037,301 3,284,604 2,214,594 1,S47,948 513,797 2,061,745 40,544 1,144,480 1979 13,277,846 21,202,410 4,101,016 1,887,248 1,328,284 770,911 2,099,195 128,425 -479,198 1980 14,971,336 24,451,888 4,277,370 2,550,504 934,966 823,134 1,758,100 118,261 25,335 - 1981 15,869,751 27,210,095 5,266,295 2,672,426 1,052,465 994,322 2,046,787 163,286 -1,292,337 1982 18,512,721 32,225,484 7,073,633 4,11,347 1,102,579 1,146,369 2,248,948 7,042 -948,623 1983 21,654,028 35,567,357 5,M,72 4,929,036 1,286,618 1,255,341 2,541,959 188,042 -906,199 1904 22,354,503 36,S87,226 4,779,554 3,804,242 1,612,566 1,627,764 3,240,330 25,234 -2,121,885 1985 26,862.644 42,492,970 4,163,366 3,615,100 2,346,753 1,643,975 3,990,72n 518,S71 4,587,702 1986 32,850,964 49,768,861 4,081,192 4,118,670' 2,334,380 2,044,136 4,378,516 187,967 5,717.046 1967 41,204,200 59,623,952 5,262,432 S,275,995 3,096,419 2,338,069 5,434,488 591,388 8,280,4M6 Projected 1988 40,530,31C .2,677,073 4,293,212 4,961,651 2,694,953 7,656,604 1,899,763 -s8,44s 1989 39,189,564 48,244,082 3,092,240 4,432,994 2,584,511 7,017,505 3 1990 37,537,497 43,906,78 2,685,224 4,337,323 2,448,456 6,78,779 29 1991 35,428,135 39,706,129 2,091,387 4,200,752 2,276,532 6,477,284 93 1992 32,832,506 35,355,484 1,755,060 4,350,712 P.112,575 6,463,287 67 1993 29,613,301 30,964,639 1,17,670 4,390,899 .910,675 6,301,577 54 - 0i 1994 26,796,714 27,458,305 689,767 3,506,375 1,67t1680 5,178,055 41 1995 23,896,587 24,224,422 333,802 3,233,932 1,478,170 4,72,102 49 * . ..... .... - ... .. . . . . .. . . . .. . . . ... . .... .... . . . . . ..... .... .. . . ... . . .. . w b /a This coltum sbos the awaunt of arithmetic lebalances in the aocunt outstandfng, fncluding tdiabursed, fro one 0 year to the next. The met common causes of labelanoes ore changes fn ewchanwe rates and transfers of debts from we category to another fn tho table. Source: IBRD Debtor Reportin Systes, besed on data provided by Bank Indonesis. X WilTS INIC WMT central CoS nnt sucbut tumm ay, 1974/ - 16s6/89 ............... ....................................................... (Up. b1itUen) .....................................................................................................................I.................................... ....................................................................**voov oF*o ............................................ Acut-----l--v------*------'''''''''''''''''''''-------- --- sd ... 1974/75 1M7M/76 1976/7 197778 197/7 1979/30 1900I 1 1961/62 1962/63 19635/6 1966/P 1965/66 19t66/7 1967l/6 1968/89 ...................................................................................... .................................................................................................................. 1. OcenSatic ravwwms 1,7M3.7 2,241.9 2,906.0 3,534.4 4,26.1 6,696.8 10,227.0 12,212.6 12,418.3 14,432.7 15,905s . 19,252.8 16,140.6 17,236.1 21,860.0 2. Rautin..upind1turs /a 1,016.1 1,332.6 1,629.8 2,148.9 2,743.7 4,061.8 5,600.0 6,977.6 6,996.3 86411.8 9,429.0 11,951.5 135SS9.3 15,026.5 20,066.0 3. Gswrinent saving C1-2) 737.6 909.3 1,276.2 1,38S.5 1,522.4 2,635.0 4,427.0 5,235.0 5,422.0 6,020.9 6,476.5 7,301.3 2,581.3 2,209.6 1,73.o ..... -----. -----.-----.----.-----....... ......................... ........... ....... ------- -------.. . ....... - ---........................ ..... .................... .................... .............. 4. ODetlpmsnt expurjitures 961.8 1,397.7 2,054.5 2,156.8 2,SSS.6 4,014.2 5,916.1 6,940.0 7,3S59.6 9,39.2 9,951.9 10,873.1 6,332.0 ,76.6 6,097.6 S. Blance (3-4) -224.2 -48.4 -77.3 -7m .3 -1053.2 -1379.2 -1489.1 -1705.0 -1937.6 -33 .3 -3475.4 -3571.8 -S0.7 -S547.0 -716t .6 ak F1n nced by: 6. Cauntwrpsrt funds /b 36.1 20.2 10.2 35.8 48.2 64.8 64.1 45.1 15.1 14.9 69.3 69.2 1,957.5 121.3 1,165.0 7. Project aid 195.9 471.4 773.6 73.6 967.3 1,316.3 1,429.7 1,663.9 1,924.9 3,867.S 3,405.7 3,503.4 3,79.7 5,425.7 S,997.6 8. Change fn baiwicet (- a inereas.e -7.6 -3.2 -5.5 -2.1 -2.3 -1.9 -4.7 -4.0 -2.4 -4.1 -2.6 -0.8 -1.S 0.0 0.0 /a Includes debt service payments. /b Progren aid. Source: Ninistry of F1innce. 0v V it canuv ecuornc NMIn Central DOfrmt Recipts, 19745 - 19889 1p. bitlion) ~~~~~~~~w4.iFCww.iwO. ..., ....................................................................................................................................................... ............................................................................ . Taxes an ffm 1,228.? !!!M 1 2,046.6 2,511.3 2,906.3 5,129.3 5230.3 10.100.3 10,009.9 11,605.1 12".5 13,624.9 M.1 10 5285 129399 Al - 122 16i. 207 M ',.I. 1:19:,~~~~~~ 2,270. 3,315.9 3,762.1 fi Jb i.| *.t1, 1'+|l 1'-| 2,.1 *'l.| 7'q't l'|'| l'l-| 9'. So t| Sl @.4 6,357.6 6 98. ,5 8 /d IWO~~~~~~~~~~~~~~~~~~h1 17. 9. 274.0 322.0 Taxe on dmest-- ----- t!'. n 158.6 231.3 319.6 397.8 491.4 S37.2 732 .0 1,137.4 1,392.1 1509. 3,478.6 5,156.3 4!95.7 631 3!lfl{lus adced te 64.? 11 2 2834 319.Z 471A 4 1:U W 1 2,A I UQ;1 I.|' 4- Z Tom an Intehtfro,l trade 299.8 30.1 421.3 481.7 587.0 843.0 648.1 a7.9 835.4 916.0 661.9 657.8 1038.9 732.6 1212.7 ............................ ..... ... ..... ..... ..... ..... ..... ..... ..... ..... ..... ... ... ... ... tt^|= ="tila,, /a 1|.: ID:. 21§.: 2'§9 ': 'M J 81: 11 II: If.. IN M 07.5 9601 J 6091-73 woon ex SO.S ~~~~~~~~~~~~~~~~~~~~~~~78.8 70.9 144.4 sontax receIpts 66.6 10.A4 118.5 143.6 191.4 187.3 315:7 336.4 435.6 519.s 687.3 1.491.5 1,147.3 1,049.3 1,259.3 .- Ceohmti revnus 1,733 7 2,241.9 2,906.n 3,534.4 4,266.1 A 1096 0227.0 12,212.6 12,418.3 14,432.? 15905.5 19,252.8 16,140.6 17.236.1 21,8,3.0 L -----.--- .. ....................................................... ..... :.......... ....... ....... ..... ... ....... .... .... .. ....... ........ . ....... .. ....... .. ....... .. ....... ... ..... .!....... evomt funds 232.0 491.6 783.8 7 4 1,035.5 1,381.1 1,493.8 1,709.0 1,940.0 3,882. 3,478.0 3,S72.6 5M.2 57 Total e e1,965.7 2 3 3689.8 407.8 A306 8 07.9 8 3 6 4 3 18,315.1 = 2 2 .................................................................................................................................................................... %g 1194 nJ x InccinS tedt eetlmttd at abautRo. d btlWn duetto Govmet tm o Pf rttmine. t O°ra te catde Cy 1t 7e uossl 1 l o WSr tea tI 1 dV se s Yi b eomist of other taxes and stmi duty). __ axud s Imury goe1 t ods. Source: ifnistry of Ffnawce. *1 Ort I. t INOKSIA WoiUTR CCUONIC EM~T Contral Goverraint Łqmenditures. 1974/75 - 19J8089 (Rp. bittUon) 1974/n5 1975/76 1976/7 1977 1978/7Y 19 >t79/80 1980/81 1981/82 13J2/5 1933/81 134/85 135/8l6 136/87Jt 137/W' r190ev/9 ............................................................................................................................................................ Perso,msl eEpendItures 420.1 593.9 636.6 893.2 1,001.6 1,419.9 2,023.3 2.277.7 2,418.1 2:757.0 3,046.8 4,018.3 4,310.6 4,316.9 4,816.3 .................~~~~~~~..... ..... ......... ..... .. -..... ....... ....... . ........; ....... ....... ....... ....... ....... xtages id suteri"es0:307:31 ,2613 Material expendKtures 175.2 304.9 339.7 376.8 419.5 569.0 670.6 922.4 1,041.2 1,057.1 1,12.8 1,367.1 1,366.5 1.175.7 t !1!m. f | s ~ ~~~~~~~~1 -3 -3 38 2 1$ " 6 -8 1-- s 0 §*83n -1,05% 0 1w1 . 1, -3 0-: 1.f2 9: 1.0lg ..; 1.222 Sahfdfes to region /a 201.9 284.5 313.0 478.4 522.3 669.9 976.1 1 15.4 1546.9 1,8t.3 2,489.0 2,69.7 2,649.1 2,893.0 ........... . . ... ... . . .. .. .. ... ....... ....... ....... ....... ....... ....... 0 r Io *t 219:1 2:1g 40t SuM 62 AJ 9 1,16i 2 1,29:2 1,4905 I ,Sd:l 2,4A 8 2, 7: 2, 9l 2, 181 Debt service pwents 73.7 78.5 189.5 228.3 534.5 684.1 784.8 931.0 1,224.5 2.102.7 2,776.S 3,323.1 5,058.1 6,805.4 06s48.0 _ fiernot ~~~~~65 -. 7t vt22JS 6S61 Al0 9108 1,2U 2,0fl:l 2,A l7 3.3 1° 5,os89 6,rts*10,68 :8> Other ependiturs 145.2 ?wo.3 151.0 172.2 265.8 718.9 1,345.1 js1 97L.l 948.1 539.5 754.o 174.4 80.0 375.5 t ^~ ~ ~~tu i-06 132.6 1,2. 2X 6 6l1i 5k @ ' 9 9 927 3g ' Routin a - Htu0 1,016.1 1,332.6 1,629.8 2:4s.9 2,743.7 4,061.8 S :9. 6,977.6 6,996.3 8,411.8 9,428.9 l1,95.5 13,S59.3 15,026.5 20,06.0 DeveLoent tpex ditures/c 961.8 1.397.7 2,054. 2,156.8 2,555.6 4,014.2 S,916.1 6,940.0 7,359.6 9,899.2 9,951.9 183.1 8,332.0 7,756.6 6,997.6 Total e=enditures 1977.9 2.730.3 684.3 4 305.7 5,W.3 o8 .o 11716.0 13 . 14 355.9 18.311.0 19380.8 228.6 22 1 917.6 ____- 19.3 0 .dS __ _6 - _9_ __ & 9 ............................................................................................................................................................ I ftm sub-gd i Kdd i p 6 . ttt¶,expendItuwJs without Identifying reions. I I ion* i7 b Source: Ministry of finu1e. n I. ......................................................................................................................................................... ~~~~~~~~..... ............................ ........................................ ! *V!jI!4*@@*<^**ve@ ........~~~~~~~~~~~~~~~~~~~~~~~~~~~~~... ... ......... ..... ... z........... .. 2. Sawat MM"E e 0!3 129.0 143. ? 6. 1*r 1!6 210. 336.8 4". 53. s S M S s X 5.4 SMS s 6. 60r* .9 2 M jI Iou 1° WY e #..-I. %.:I&II II.t l1. 1 IN. fIII ld 1 .t- % 11. 1:i I 411 8t- 3. Suctont t8u p?ro_ 25.0 OS.1 94.1 13r.0 176.ii 252.0 377.2 5M.5 ".2 Mt.2 VA.4 753. ? no 6 30 3 4,0,28 ....................... .... .... .... ..... ..... ..... ..... ..... --- . .. ... .. .. .. 4. IP 2B.O 34.6 42.2 2SZ S 3A 71.4 or 2 94 S 1OS 2 132.4 1157.2 160 5 Vn O 246 6 0 MA, S. Iri n Jw NW Ent lir 4.0 S.S 5.0 9.0 10.4 6.6 6.4 6A5 s.r S.2 4.2 6.9 r.3 s.o 6.0 Vt# g mt S.3 3.2 .0 6.2 3.1 0.6 , .9 .09. .6.............. ............................ ... ... ... ... ... ... ... ... .... .... .. w.... .. .... ... .... ... .... ... .... .. . __.... ... .... ... .. . 6. rwtlizer subsdy W2.2 134.5 107.3 1.8 82.6 12S.0 M".6 VIA. 420.1 324.2 n31.6 MA7. 46.2 MX.S 200.0 r. rmt ... l '';iieipeiion'XP"A 10. 0o.7 21r.9 166.9 129.5 252.8 4r6.3 480.9 336.6 ss1. 336.1 4123 8Js9 83. 8 sr5 ~~~~~~~.... ..... ..... ..... ..... ..... ....0. ..... ..... ..... ....*. ..... ..... .... ; .... S. othr 6r7 "s.O r9.8 10s.8 75. 2st.0 385.5 sMs.3 326.r "8.7 474.9 51i.2 SUA. 109.0 119.3 *... .. . .... .... ..... .... ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... Total - 8) r6#59 926. 20-11= .1j.49J, "U. ,s= .- "416i4 162L6.1 0631-.St . 31-'I- I= r*-9r# 2w0- 9. Project old 195.9 4TIA 4 A m V 10? 873 1,316.3 1,429.7 i.663.9 1,924.9 3,867.5 3.4N.7 3,5505 4 3,7! . S!2. !," ................................................................................ ........................................................... 0...................................n Source: Ninfstry of Ffmaeo. u IUOESIA WtEY ECONhC tEPe ....................... D.wtosnt ¶puiitwes Se cto 197 4/75 19339 (tp. billfon) ..................................................................................................... ........................................................................................................................ _ S$ctor 197/7a11576n17677 /75 1979 tIl VAt 1961/62-1626 168 1 1965/6 1 7 I9ii;1ii ........................................................ ................................................................................................................ Wriculture en Irrigation 301.8 257.0 356.1 30.1 450.3 508.2 929.1 93.9 931.1 912.9 1699.1 1,137.5 69.9 1,130.7 1,299.5 <°=|$)'et"" t (227.2) (134.5) (107.3) (31.6) (62.6) (125.0) (25.6) (31.4) (420.1) (324.2) (731.6) (477.1) (467.2) (203.5) (200) Indstry wd nining 70.7 124.1 194.9 139.0 205.0 402.6 490.9 826.7 913.1 2,153.1 839.2 1, 19.0 u60.7 349.9 374.2 Electric power 79.0 M. 218.1 223.3 271.8 330.1 430.7 S30.2 M.2 69.5 911.4 1,446.9 960.4 1,006.9 1,066.6 Traportetion md toswi 123.5 311.6 426.8 3S4.7 413.2 465.3 0.5 607.2 675.8 1,5s.7 1,428.3 1,44.3 1,131.4 1,2.1 1,654.3 Nuwowr and to uu.gration 4.5 11.9 2.1 60.7 94.7 162.2 2. 416.5 436.0 4S564 421.6 66S.1 292.4 156.6 147.4 R"gonal delom t 135.9 172.9 190.0 250.6 275.1 335.6 482.4 61S.9 711.3 748.7 790.8 649.9 936.9 67.5 1,032.2 Idwction 47.2 13. 13S5.5 210.6 251.1 361.4 S74.7 72.7 M33.2 1,032.1 1,231.0 1,412.9 1,164.4 1,021.5 1,075.6 Reslth 25.3 37.7 48.2 71.4 79.4 142.4 218.1 235.5 259.3 273.7 320.0 397.9 325.9 207.7 39.2 ousng an weter suply 6.5 13.3 30.4 69.5 55.6 117.5 190.7 16.3 150.7 220.9 224.2 334.6 336.6 412.0 438.4 ~ret public servces /a 46.5 72.2 113.9 123.1 224.7 472.5 69.3 79.6 7.5 6 99.2 927.1 976.5 7.6 569.4 64.7 part cp 97.8 115.4 225.2 190.0 161.6 445.6 383.9 389.4 280.7 233.9 29.7 220.5 211.4 191.1 207.9 Othe /b 21.1 40.2 66.3 63.8 73.1 250.3 404.4 423.2 SS4.7 776.1 67.S 76.0 611.2 497.0 S66.0 Tot 'l n 961.8 1:.. 2,05.5 2,156.6 2,555.6 4,014.2 5,916.1 6,940.1 7,3S9.6 9,99.2 9s11.9 ...0n.1 6,332.0 7,156.6A 6 .6 To°lrttfiXc udfl) 734.6 1,203.2 1,947.2 2,125.0 2,473.0 3,89.2 S,432.5 6,56.7 6,939.5 9,S74.7 9,220.3 10,396.0 r.s. 7,s53.1 3,697.6 ................... ..................................... ..... ............ ....... ............ ....... ............ ....... ............ ....... ............ ....... .................. ..... .vo...... ............................ ....... A fn t tF=rone rm 19 6 inctuda natural resow cle dmp an ewwrainant. Sourcez Ninistry of Finance. I1 .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~U f INOCUSIA oUWr EaCNIC wPT Prejct Aid by eWtor*, 194/ 19-8/ (ftp. billflm ............................................................................................................................... ................................................................................................... ,-,,,,-,,-,--,-,,-,-,---,-,,,--,-,-,--,-....... AM .............................................. ...- .-oe l-@-vX-------'''---'-'9'''-'-'''' '' 1974/ 19/76 W61976/ MMr7/7 I97/9 1919/80 IM/SI tt/O 190/ 19t34 1964M/ 1965M/6 "WV 1s7/M 1s9 ............................................................................................................................... ................................................................................................... Agricultwa wd irrwitian 26.3 43.0 106.7 145.5 15.2 154.5 m2.0 135.9 101.0 155.0 472.1 1t0.2 236.8 555.6 90.4 indarsy &W wini 64.1 76.4 137.3 95.4 199.0 306.8 225.9 560.S 33. 1.051.0 670.9 "6.2 631.8 801.7 319.7 Elactere p_w 38.5 89.7 165.2 163.9 207.8 257.2 246. 306.2 506.0 I.182.0 653.4 1.172.2 9.9 718.7 1.059.! lt pq satiton wi tuwirm 42.2 226.5 303.8 212.9 249.7 192.4 306.0 263.6 332.1 89.0 400.6 3.8 M.9 8345 1.306.? a"ww and trmho fgratian 0.2 0.6 1.0 9.8 11.6 23.0 31.1 30.5 14.9 65.0 75.? 35.6 123.1 71.7 92.9 RN*Iul dw,lp nt 0.4 0.4 1.5 7.9 7.9 16.2 23.6 16.7 2.6 7.o 1.0 7.6 24.6 4.1 44.5 uiation 7.8 7.3 5.3 29.5 35.3 42.6 50.0 36.7 24.2 m .0 119.? 58.6 345.6 742.7 779.5 *with 7.4 6.9 5.9 4.8 21.7 34.4 36.2 33.6 23.7 37.0 77.5 56.1 100.1 7.6 87.0 hs.ni and uter uppty 1.1 2.8 2.9 23.1 18.3 28.1 33.0 21.7 21.2 51.0 0.7 77.3 139.3 200.5 3s5.? GC ansil p.tMie sorvie" 0.0 0.0 0.0 0.0 54.1 174.9 139 179.5 83.2 152.0 254.9 186.1 257.0 3t4.9 30.3 _mfIUUt captal psrtcip.tion 6.7 6.7 7.3 23.1 33.1 34.3 35.6 27.9 46.6 45.0 140.3 203.0 105.2 173.3 23 .3 0th.. / 1.2 11.1 36.7 6.7 13.6 49.7 44.6 29.1 35.4 42.0 173.9 170.7 231.4 343.4 346.1 totat projewt ad b 195.9 471.4 773.6 737.6 967.5 1.316.5 1.429.r 1,603.9 15924.9 3,867.0 3,40.7 3.503.4 3.1 .? 4,418.9 S.9.6 ................. .. ...... ..... ..... ..... ..... ....... ....... ....... ....... ....... ....... ....... ....... ....... .......... /a sinc 1919/60 imisudes twtial rueuress duwiepebt on awiruoumnt. ft lb Intltues c Iowal credits for dtLopmm progrm/projwets. Sa e: Ninistry of finw.anc g- IONESIA COUNTRM ECOHONIC REPORT Money S4plty, 1974-1987 (Rp. bittion) Currency Demnd deposits Change over period End of Total ................................... .................... Amstt (X) Amnt () mount (X) ................................. ....................................................................... _ 1974 937 494 53 443 47 268 40 1975 1,250 625 50 625 50 313 33 1976 1,603 781 49 822 51 353 2S 1977 2,006 979 49 1,027 51 403 25 1978 2,486 1,240 50 1,248 SO 482 24 1979 3,385 1,552 46 1,833 54 897 36 1980 4,9M5 2,153 43 2,842 S7 1,610 48 1961 6,486 2,557 39 3.929 61 1,491 30 1962 7,121 2,934 41 4.187 59 635 10 1963 7,569 3,333 44 4,236 56 44 6 1964 8,581 3,712 43 4,869 57 1,012 13 19l6 10,104 4,440 4 5,"64 56 1,523 17 FCe0 1986 11,677 5,338 46 6,339 54 1.S73 16 1967 12,685 5,782 46 6,903 54 1,008 9 o lb ....................... ................................................................................ f Source: ln Im is. INDONESIA Cou"TRY ECMN)NlC REPORT .......... ................ Chenges In Factors Affhcting Money SuppLy, 1974-1987 .............. ........................................................_ (Rp. billfon) PubtlIe Sector ...................................... Net claimg Claim Blocked 7otal hchao In on on official aocoiant Money Supply net Central entities /a CLain on Time Net ---------------------- End of forsein Governeent & pubifc busirness & & savings other DAxnut Pereentage period assets enterprises individuals deposits /b item (2) ............................................................................................................................... 1974 364 -132 294 - 147 -196 -209 258 40 1975 -588 162 926 -415 298 -213 143 313 33 19?6 345 -333 449 -51 356 -300 -113 353 25 1977 568 -275 35 67 284 -96 -180 403 25 19781c 50 -311 349 88 546 -112 -128 482 24 1979 1,788 1,779 371 85 557 -516 -436 897 36 1980 3.040 -1,868 489 -5 1,178 -859 -365 1,410 48 1981 149 -591 593 36 1,756 -535 83 1,491 30 1982 -1,237 129 689 109 2,260 -724 *591 635 10 1983 /d 1,180 -1,286 -42 118 2,183 -2,520 815 446 6 1964 3,530 -3,359 190 124 3,646 -2,262 -857 1,012 13 1985 1,70 -278 514 63 3,334 -3,693 -166 1,523 17 1986 /e 1,870 496 253 -29 4,544 -2.935 -2,628 1,573 16 1987 2,444 1,539 730 -2 6,245 -5,216 -4,T32 1,008 9 ..................................................... ................................................................................................... I/ Refers to government socounts blocked for special purposes. /b includes foreign currency deposits held by residents. Ic Does not include reatluation adjustment to foreign exchange balances resulting from the riplah devaluation of NoeveSr 15, 1978. The adjustments amount to Rp. 650 btilton in net foreign assets; Rp. 46 billion In net claims on Central gevernment; Rp. 551 bilLion In cLaim on official entities; Rp. 164 billion In blocked accosmt; Rp. 41 biLlfon in clafis on businesses and individuals; t Rp. 83 billion in time and savings deposIts; and Rp. 1,041 btilion in net other item. Id Does not include revaluation adjustment to foreign exchange balances resulting from the rupiah devaluation of March 30, 1983. The adjustments amnt to Rp. 1,962 billion in net foreign assets; m Rp. 131 billion in net claim on Central goverxment; Rp. 146 bfilion in claims on official entities co H and publfe enterprises; Rp. 106 billion In blocked accoumt; Rp. 148 billion in claim on businesses and individuals; Rp. 620 bilLion In time and savings deposits; and Rp. 1,399 billion fn net other item. /I Includes revaluation adJustment due to devaLuatfon on September 12, 1986. Source: Bank Indonesia. RCUhhIA COWIR ECONOIC UUPOf .........Y.......... Coaeltidated 0lam Sheet ot St. 1974-19r 6 (3p. biltlin) ............................................................................................................................................................... End of period 1974 19n 1r7 19s 1975 1979 1960 1961 1962 19# lb 194 19t5 t16 it ............................................................................................................................................................... Met foe.ipn ons"t 43 72 4117 8357 04631396 et to ef p _ ts OS3 n 41-. 9651,^63 3,t 6 4i9 6.311 5.S65 ts 12,368 14.0i lS4 ..................! ... .. .. ... ..... .... .! ... ... .. ... .. .. _msstic credit !5z* 2,367 2,M7 2,900 4,046 4,232 3,979 5,651 0t8 6 9244 10,34 13.975 19"25 Clism an pblic sector 31r 991 65056 83 1.2 !!075 360 43 -"4 939 -3.! *37 .2.96 central geserrnrnt -167 -5 339 -.13 -675 -1.703 -3,619 4,330 -4.193 -s,n79 -9,096 -9,376 -8.837 Claib an official entitles cnd pubtle enteprises /a 461 1,411 1,861 1,895 2,796 3.16 3,655 4,247 4,99 S.040 5. 30 5,741 S,993 Gowerfnt-blaked coau-t 0 -415 -466 -399 -476 -391 -396 *360 -252 -240 -116 -52 -SI. Claim an private ent rprises ........ ..........f..... end indiviAislo 1,187 1,376 1,732 2,01? 2,60 3,19 4,33 6 096 8.312 10,63 14,329 I#17 22,J9 ............... ...... ..... . .... l..... .... . ..... S .... ..... . ..... I .. .... ... .. . .... Loans 1,141 1.321 1,6S5 1,939 2,493 2,99 4*,1W0 S,644 7.995 10.161 1i3500 16,392 20.370 other clim 6 55 77 73 111 166 232 25 317 499 779 1,270 I,8 i.".........-------------------- . . w... .ig ...i ... i;v ...i;ia .. ...iz.w ---ii ii -- wiv ciu Assets * lidailities 2,157 2,439 3.205 3,65S Sf709 r,550 10.398 12,U62 1U,411 18,581 22,713 2S,021 35.254 ................................................................ ..... !.... ........................... S.... ...... Iport daposfts 2J3 79 as 1U 174 213 365 296 300 242 216 23 402 Met other tem 313 362 486 608 1,726 2.114 2,342 2,448 3.r% 3.676 4,5S8 4,400 7,169 Mousy aid gqoss moneI ,152 197 3131 Sa 5223 ! 9,716 11,07S 14,663 17,937 23U153 27V,61 .......... .......... ..... ..... ..... ..... .1 ..... ..... ..... ...... ......-- ------. ....... ..... 'bnoI 637 1,W 1,605 2,006 2465 3.366 4 6,485 7,121 7.569 !!! 1 11,67? Cr ..494 25 71 979 1,210 1.552 2,153 2.557 2,934 3,33 3,7t2 4,440 S,=33 Dwud deposits 143 425 622 1,02W 1,2U 1,834 2,82 3.928 4,18T 4,236 4,69 5,664 6,339 O_I mousy /d 515 728 1,02M 1.125 1,321 1.837 2,696 3.231 3.954 7, WA 9.356 13,049 1S,904 ............................................................................................................................................................... /a For 1979, Includes dhn resulting frmu the eoxhw rate adjustm nt on M dr 15, 1975 fra Utp. 41S to tp. o25 per MNS. lb Includs dcme reulttno fr* the e henws rate adjustment of larch 30. I9M3 fra op. 702.50 to Up. 970 per USS. Jc Includa cnes reulting fra the exchw rate adjwtmnt an Septe _r 12, 1906 fra tp 1,134 to tp 1,64 per UM. S id for 1979, include realuatihn of foreign exchan deosits munting to tp. 99 bilttin. oS. source: ,,n kIpinssia. 10. I. LIIOUSIA COUNTY ECONOMIC FEWOR ............ Consoldated ble e het . the Monetary h4thorities, 197f-19J66 ............................................................... ........... (tp. billion) ............................................... I.....................................................................................................................................ev* End of period 1974 1975 1976 1977 1976/a 1979 ¶980 1981 1982 1963 /b 1984 1985 1966 Ic .................................................................................................................................................................................. Foreign ats 612 246 620 1,057 152 2,626 4,216 4,033 3,6S7 5,314 8,047 9,279 9,356 ................. Claims on sicsto .jr?61,9_Mirtew sotand "1c 122 368 239 312 509 580 604 860 1,109 495 679 1,037 2,622 en*:rpr1is o27 886 1,209 1,225 1,925 2,143 2,414 2,584 2,626 2,230 720 761 901 Cltams on private enterprises .................... ............... and individaas 9 14 ¶7 21 33 45 69 108 227 186 233 363 443 NO claims I i it 4 R 9 9 8 'Al 1 l o N Clains on dposit moy baiks 294 565 640 681 846 1,129 1,722 2,548 3,742 4,365 6,938 7,633 8.672 Other assets 37 66 77 4 37 113 220 428 1,883 2,193 3,231 3,907 6,935 Total assetslliabilities 1,301 2,145 2,802 3,300 5 ao2 6.616 9,245 10,561 13,254 14,783 19,848 22,960 29,131 Ruerve M?7,03. 1,333 1,670 1!a? 2,429 3,258 3,826 3.99? 4,88 5.473 6,435 7,808 ency~t but ad 4 6 8I.A .mS 2,4U 2,qL 2,1W 3T31 3W4' 4LAO 5: v:e eco its | 31 ,2 5w l I I I I4 F IptcuJrr I d other 2 4 3 1 3 27 41 104 57 110 25 64 42 8=s' r= jSd ard foreign 75 70 49 SO 38 56 101 94 115 231 220 24S 355 lort deposits 57 19 51 103 105 126 119 134 6 74 33 23 0 Foreign liabilities 42 111 112 229 193 149 177 30 29 24 812 1,022 .'. ......9 -. !tS!?4119 3.805 5.577 6,214 8,573 86,74 12,632 13Ł!! fuxis | ~~~~~2 4| 4 0 8 ,Z7 5 3 ,N 4 '3 4 .2 M 4 , W 6 , p 6 3 3 4 m y Capital accosmt 137 149 182 190 1,133 1,393 966 810 600 612 1,179 1,322 3,206 Other liabiltIes 13 164 122 20 39 58 699 851 3,407 2,878 3,959 4,969 6,000 00 ......................................................................................................................................... cr lb /A Inclut ict atu frm the excha rate adjustment on Nover 15, 1978 from Rp. 415 to Rp. 625 per UMS, - SankId 5 l o o 9ir - 182 - Statistical Annex Table 6.5 IDOIESIA CUITRT E'NIM IC RtEP0UT SaikIng Syster Credits by Eonomic Sector, 1974-1986 /a .......................... ........... ....................... .. (Rp. billion) Sectors 1974 1975 1976 1977 1978 /b 1979 /c 1980 1961 1982 193 /I 1964 198M 19J6 / ........................... ............................................................ ..................................................................................... .... Agriculture 116 220 266 270 345 438 539 813 1,025 1,226 1,318 1,656 3,09? ........ ... ... ... ... ... ... ... ... ..... .... ..... ....._ ..... In nip1ah 116 212 256 265 344 436 539 813 1,025 1,226 1,318 1,656 2,097 In foreign xwhnge 0 6 10 S 1 2 0 0 0 0 0 0 0 Ninirg /d 11 741 1.036 1,062 1.699 1,893 1.867 1,693 1,472 806 384 258 394 ...... .......... .. .. .. .. ........ ..... ....... . . ..... ....... --- ...... --- ---. ... .... In rtpIah 11 69 176 197 230 1,893 1,867 1.693 1,472 606 384 258 394 In foreign exchange 0 652 606S 1.469 0 0 0 0 0 0 0 0 lufifacturing industry /e 359 719 990 1,156 1,624 1,933 2,213 2,762 3.923 S,207 6,667 7,592 6,537 ........ ............... ....... ........... . ... ....... ..... .... .. ..... ..... ..... ....... . .......... ..... .......I In rupiah 359 508 73 904 1.265 1,S36 1,826 2,376 3.429 4,S95 6,205 7,069 8,371 In foreign xchanh 0 211 251 2S2 3S9 397 37 386 494 612 462 S23 166 Trade /f 627 766 858 912 1.114 1,338 1.976 3,062 4,129 S,132 6,344 7.25s S,389 ~~~~~~~~~~~... . . ...r ... . .. . .... . .... .. ........... ....... ... .. .... .. In rupa 604 741 A3A 898 1,105 1,334 i,970 3,046 46009 4,761 6.299 7,214 6,329 Info r nexchae 23 22 1 14 9 4 6 16 120 351 45 41 70 Service rendering Industry Ig 122 172 260 319 389 422 946 1.385 1,867 2,277 3,169 4,183 4,813 ............... ..................... . .... ....... .. . ... .... ... .... ... .... ... ... ... ... ... ... ... ... .. .... .. ... .. .. In rupiah 122 166 253 311 385 418 939 1,382 1,860 2,253 3,088 4,047 4,598 In foregn exchange 0 6 7 8 4 4 7 3 7 24 81 136 215 Others 339 132 156 219 223 244 333 444 606 651 931 1,213 2,162 ...... ....... ... .... ... .... ... .... ... .... ... .... ... ... ... ..... . ................... In rupiah 174 127 154 218 221 241 331 444 606 651 929 1,210 2,i56 In foregn exchnge /h 165 5 2 1 2 3 2 0 0 0 2 3 6 Totat 1,574 2.750 3.S66 3,938 5,394 6,268 7,874 10,159 13,022 1S,299 18,813 22,157 26,402 ..... ..... ..... ..... ......... . ..... ..... ...... ...... ...... ...... ...... ...... In rupiah 1,386 1,842 2,415 2,793 3.55 5.658 7,472 9,754 12,401 14,312 18,223 21,454 2S,94S In foreign exchange 188 907 1,1S2 1.14S 1,844 410 402 405 621 98? 590 703 457 ................... ................................................. ............................................... /a Credits -utstanding end of period. Intludes fnvestment credits, KIK wd KWP. Excludes Interbank credits, cerdits to central goverruent and to nonresEidets, and foreign exchange coapnent of project aid. /b Includes forelgn exchan revaluation mmunting to Rp. 681.8 bitlion. /e Includes foreign exchange revalution asmnting to Rp. 698.0 biltion. /d Inrludes credits to PERTNINA for repay ont of foreign borrowing. Since Narch 1979, credIt In foreign exchnge to PIRtMMINA has been converted to rupiah credits. /e Processing of sgricultural prodxcts Is lasstmifed under aenufacturing industry ccording to International Stasdard Indutriat Classification CISIC 1968). Starting 100, credits for cowtruction which were previously includd in *mnufacturing indsatry are now included in service-rendering industry. .ff Includes credits for food procurement and hotel projects. hV Credits for electricity, gas ard wter uapply are included In servfce-rendering Industry sector. /h 1974 figure refers to credits in foreign exchenge given to all sectors, excqpt trade. /f Includss foreign exchane revaluation en.mting to Rp. 251 billion. /J Includes revaluation adJustoent due to the devaluation of September 12, 1986. CWUIY EbiC WORT ....... ........................ u*ing cradita olattan h In bIh ad fForeign Exhae by Grow of Bob, t1974-1986 /a (tp. bIllion) .............. .................................................................................................................................. 1974 1975 1976 197 1978 lb 1979 /c 1980 1981 1982 19I6 /d 1964 1905 1986 /a .......................................................................................... ... ........................................................................................................................... Um* IndWnesia direwt credits if 21 093 1.212 1,229 1,935 2.16l 2,454 2,69 2,M 2,356 870 964 1.14 In r1ph 231 244 351 365 46 2163 2,454 2,649 2,M 2,356 gm0 1144 In forelgn exanu 0 49 861 664 1,469 0 0 0 0 0 0 0 0 State cmmeolel bans /g 1,136 1,602 2,007 2,267 2,832 3,2, 4.M295 5,181 8,031 9,77 13,345 15,371 17,72 In rupfah 1,004 1,397 1,774 2,056 2,54P 2,958 3.954 5,523 T,474 8,910 12,959 14,925 17,711 e In for egn exchawge 132 205 233 209 283 312 341 358 55? 8?7 386 449 71 w latfonat Prfnvte lank /b 89 133 197 257 366 493 71 1,081 1,554 2,294 3,.52 4,106 6,M ....................... .. --- --- --- ... . ... ... . .. ... . ... ... ... ... ..- ..... .. ..... ....................................... In rupiah 69 132 197 24 360 466 705 1,069 1.534 2,279 3,40 3,991 6,061 In foreign exchang 0 1 0 3 6 27 6 12 20 15 72 115 211 Foreign Banks 117 122 1S0 184 262 342 414 548 666 862 1,046 1,073 1,204 ............ .... ... .... ... .... ... .... .... ... .... ... ... ... ... ... ........ . .... .. .... .. .... .. in rpl1d 62 70 93 116 176 271 359 513 622 767 91 934 1,029 In forelgn exchnge 55 52 57 68 86 71 55 35 44 95 132 139 175 Totat 1.573 2,750 3.56 3,937 5,394 6,268 7,874 10.159 13,022 15,299 18,613 22,157 26.402 In rupiah 1,386 1,843 2,415 2,793 3,550 5,858 7,472 9,754 12,401 14.312 18,223 21,454 25,945 In foreign exchaneo 187 907 1,151 1,144 1,844 410 402 405 621 987 590 703 457 ................................................................................................................................................ rt /a Credits outsteding at end of period. Includes Inveatment credits, KIK and IOI. Excludes Interban credits, credits to Contral Govrment and to non-residents, wd foreign exchang coponent of project aid. /b Includs foreion erxcne revaution nsmting to Rp. 681.8 biifon. /c ncludes freign exdchang reatuation nuoting to Rp. 698.0 billion. /d Includes foreign excag revaluation munting to Rp. 251.0 bitlion. /e Includes realuation adjustent due to devltuation on September 12, 1986. I /f Ecludes liquidity credits, sncludes credto to Pertanfna for repqsnt for forelgn borrowing. / include *tate dvelopent ban and luldity credits. /b Includs liquidity credits. National private bak refer to natiaml private cerclal banks wd regional development bons. Source s Dank Indonto. - 184 - Statistical Annex Table 6.7 wOI"TRY ECO5OIC EPORT l 1t-Scte Invtmmt Credits mid er_wnt ............. ........................... _. Working capitat Credits, 1974-196 ,,,, ~~~~~~.....,,,....... __ .. _ ,,, .... ,,,_, Slt-8tete Prnmint Workin Investment Credits /a Capit.t Credits /a , .................................................................. ............................................. NiMsr of Apprv a- *hd.t Of Appovd out- applicatiats vatue standing *pplcations vatue studing ('000) ---Rp. billion)--- ('oO) --- (p. billion)--- .. ., .____.............................................................................................. ..... 1974 10 1S 13 1S 16 13 1975 17 28 22 24 29 18 1976 28 50 36 166 67 41 1977 40 74 S0 322 lS 62 1978 55 106 65 420 177 84 1979 72 163 99 644 305 154 1980 119 321 210 905 602 312 1981 173 540 380 1,272 1,124 647 1982 207 669 407 1.462 1.535 803 1983 231 812 393 1,633 1,834 856 1984 250 921 366 1,Os9 2,309 928 1985 266 1,015 328 1,996 2.76 885 1986 283 1.135 305 2,147 3,241 879 /a Cuualetive - at ad of period. ,ource: Bank Indonesia. INDOhfSIA CO tNl ECONMIC REPOIT ....................... liwestent Credits bV Ecornmic Sector, 1980-1986 /a . ............................ .. (Rp. billion) End of perdi 1980 1981 1982 1983 1984 1985 1966 Creitts apovd /b 1,675 1,906 2,679 3,900 4,509 5896 7,966 ........................ ......... . .. . . ..... ..... ..... ....... ..... .... ..... ..... .. ..... ............... .. .... .. Agriculture 277 340 67 734 809 1,402 2,274 Nfning 5 40 54 ST 179 229 363 Mmfcturfng lrdutry 911 911 1,369 1,' 2,374 2,765 3,253 Trile 53 87 134 129 237 27 369 Service rendering ln.try 422 S16 641 986 666 1,173 1,638 Others 7 12 14 11 44 52 69 Credits outstaning /b 1,296 1,436 2,099 2,861 3,802 4.802 6,1 67 ................... .. ..... ..... ..... ..... --- .....- .-.-...* Asriculture 137 202 322 477 555 877 1,233 0 Nining 2 26 34 49 178 224 367 Maf cturing Indestry 820 741 1,095 1,635 2.102 2,423 3,061 Trade 41 73 120 115 168 281 332 Sevfce rendring indatry 289 390 519 576 770 975 1,108 Othom 7 4 9 9 29 22 66 ..... ........ ^..................................... .................. .*........................ /a ExcluSs Iwestmsnt credits from Bani Inines-ia lncltuds State Detelmpmnt 1. Bk Local DeveLopinnts Sw*s. Dot with the saw cit ffictfioan prfor to 1960 are not ailable. lb Exluels S0tt Scale Inestnt Credits, l:estment credits to the central Govertnt an toreign excang capnents of project aid. Source: Ban Indonesia. 1CA2 - 186 - Statistical Annex Table 6.9 IZEONSIA OUITRY ECO"OJC REPORT Tim Deposits with State Banks, 1961-1966 (Rp. billion) 1981 1982 1963 1964 196S 1986 24 month* 748.3 8648.5 S65.8 280.4 411.1 518.5 12 months 81.5 79.1 885.9 1,721.0 2,79%.5 3,867.1 6 months /a 106.8 121.8 549.3 720.9 725.8 950.1 3 months or less 42.1 44.5 679.3 672.7 1,306.? 1,322.7 Natured 103.4 125.6 142.9 10.0 10.9 13.1 Others 10.9 11.3 7.6 91.9 87.9 58.2 Total /b 1,093.0 1,230.8 2,830.8 3,496.9 5,336.9 6,729.7 /a IncLuds som 9 month deposits during 1964. /b Includes interbunk tim depoefts cad residmts' tlm deposits. Source: Bak I onesia. INUSIA COUETY ECOUONC PEPCRT ....................... Interest tes n ODepoits at Comes cale tin. 1978 19JJ /a (1 p.e) ................................ ........................................................................ _................ State Benk Prfvnte National Ssn /a TABANAS TASKA Certif l- Tin Deposits Tlm Deposits End of eand Savings Savings cate of ----------- ----------------------- ----------------------- ---------- - Period Deposits Deposits Deposits Deposits Less than 3 6 12 24 Less than 3 6 12 24 /b Ic fd Ie 3 ms /f woe os Nos os 3 osn/f no os. os. sos. 1978 /g 1.8-3 6-15 9.0 7.6 6.0 9.0 12-15 12.8 12.5 15.6 17.2 20.7 1979 1.0-3 6-15 9.0 9.8 10.6 5.1 6.0 9.0 12-15 16.2 16.7 18.3 19.6 19.6 1980 1.8-3 6-15 9.0 10.2 7.2 8.2 6.0 9.0 12-15 14.2 16.1 17.8 20.1 19.3 1 1981 1.8-3 6-1S 9.0 10.9 12.1 10.2 6.0 9.0 12-15 15.4 17.4 17.9 19.4 19.0 1982 1.8-3 6-15 9.0 12.5 7.7 8.6 6.0 9.0 12-15 16.9 17.1 18.5 19.3 18.8 1963 /h 1.8-3 12-15 9.0 15.4 14.4 14.8 13.1 17.5 12.5 18.7 17.4 18.8 19.7 19.3 1984 1.8-3 12-15 9.0 16.5 15.1 17.1 17.2 18.7 17.2 19.8 20.7 20.7 20.4 21.0 198S 1.8-3 12-15 9.0 14.S 13.4 14.6 16.0 17.8 18.3 14.6 15.9 17.8 19.8 21.3 1986 1.8-3 12-15 9.0 14.0 13.3 14.2 14.7 15.2 16.0 14.8 15.5 16.2 17.3 20.1 1967 1.8-3 15.0 9.0 16.0 15.5 17.0 17.3 17.0 17.4 17.2 18.6 19.3 19.1 19.7 /a Weighted verage rate of Interest at selected banks. lb from ftrch 1983 3f for *omunts above tp. 50 illton, 1.8X for Up. 1 to 50 miltion, and Individueally detemned for a osmts less than Rp. I alilon. /c ^TIANUM or ^Tabungan Peabawnman UastsaL (NatlonaL Developoent Savings) is an ordinary savings account sponsored bV Mlank c T*bwsan negras (State saving Sank) and offered by all state gmoed and a private national comercial banks, and post offic . Until Jure 1, 1983: 151 for mumts of Rp. 200.000 or lets; 6X bove Rp. 200n000. From Jure 1983: 15% for Rp I s mIllion or less; 12 for moe than Rp. I millon. t fo Id OTASKA" or ^Tabumgan Asuransi BerJnsks ^ Insured TIm Deposits) is an ordinary titm depo1its sponsored by Mlank Tabuagan Ueg.ra n *d offered by the scae institutions described In (c) ebove. Js NidouInt of range for six months rates. /f One month tim deposits rate used as representative rate. /9 Effective Jauoary 1978: 15% for Rp. 2.S wIllton or less; 121 for ore than Rp.2.5 nillIon for 24 mnths State Sank tim deposit. /h Ceiing on tim deposit Interest rates at state banks removed on Jure 1, 983. IM 1Z leaptl minfim rate starting In Jue 1963 for 24 months State Bank time deposit. Source: lank Indonesia. - 188 - Statistical Annex Table 7.1 IEOhSIA COUUYRY ECOHO1C REPORT ....................... Principal Agricultural Prodasts by? Sasctors, 1974-1986 ...... ................,............... ('000 ter) ...................................................................................................................... Product 1974 1975 1976 1977 1978 1979 1960 1981 1962 1983 1984 1985 1986 /a ......................................................................................................................- Food crop .......... Rice 15,276 1S,185 15,845 S,876 17.52 17.872 20.163 22,286 22.837 24,006 25,932 26,542 26,784 Corn 3,011 2,909 2,572 3,143 4.029 3.606 3,991 4.S09 3,235 5,087 5,288 4,330 5,931 Cassa 13,031 12.546 12,191 12.488 12,902 13.751 13,726 13,301 12,988 12,103 14,167 14,037 12,882 Sweet potato 2.469 2,433 2,381 2,460 2,083 2,194 2,079 2.094 1,676 2,213 2,156 2,161 1,967 SOYS bes (shalled) 589 S90 522 523 617 680 653 704 521 536 769 870 1,196 GrouA ts (shelLed) 307 380 341 409 446 424 470 475 437 460 535 528 614 Fishories Saltater fish 949 997 1,082 1,158 1,227 1.318 1,395 1.408 1.490 1.682 1,713 1.822 1,923 Freshwater fish 388 393 401 414 420 40 455 506 524 533 S48 573 607 _eat nd dairy .............. Neat 403 435 449 468 475 486 571 596 629 650 742 808 861 Eggs 98 112 116 131 151 164 259 275 297 319 355 370 432 Nilk /b 57 51 5T 61 62 72 78 86 117 143 179 192 220 Cash crops Rbber 817 782 857 844 884 84S 1,020 963 900 1.007 1,033 1,055 1,060 PaLt oft 348 397 431 473 532 642 m 748 884 979 1,147 1,243 1,269 Cocnuit/ecp 1,341 1,375 1,532 1,518 1,S75 1,582 1,759 1,812 1.718 1,604 1,750 1,920 2,091 Coffee 149 160 193 194 223 228 285 295 281 305 315 311 396 Tea 64 69 73 79 91 125 106 110 94 110 126 127 136 Clo!s 15 1S 20 41 22 35 39 40 32 41 49 42 53 Pepper 27 23 37 43 46 47 37 39 34 46 4 41 40 Tobacco 79 82 69 84 81 87 116 118 106 109 108 161 164 Cane ver 1,237 1,227 1.321 1,436 1,516 1,601 1,831 1.700 1,627 1,628 1.810 1,899 1.866 Cotton 3 2 1 1 1 1 6 10 13 14 12 45 52 Forestry /c Teakwood 620 595 480. sn 475 495 613 578 692 718 758 7 798 Other tigbr 22,660 15,701 20,947 22,366 26,256 25,520 21,702 14,024 13,236 24.180 27716 24,277 27.403 ................................................. .......................................................................................... ............................... /a Preliminary figures. /b In lites mfillion. /c In 8000 cbc eters. Souc: Supleptnt to the President's Report to Parlfmnt, Augst 15, 1987. - 189 - Statistical Annex Table 7.2 coTnT 1EC~ IPOT ................ Prodbution of Aj.or Crop bt T*pe of Estates 1974-19J6 ...................................................... ('000 ton) ....... ........... _....................................... ____.. ........., _ . ................... Product 1974 1915 1976 197T 1978 1979 1960 1951 1962 19U 1904 1M 1966/0 ..... ....... .................. .....................................__.. ................ ................................ .. ..............._.... ....___._......_ Sltholdrs liMesr 571 53S 610 554 612 616 705 740 536 673 7n 4 720 729 Cocoat/eqpr 1,33S5 1.370 1,527 1,513 15S54 1,561 1,737 1.769 1.707 1.590 1,734 1,90S 2,07' Coffee 132 14 175 101 20S 209 266 276 262 207 291 288 373 cloves 1s 15 17 37 21 35 39 40 32 40 48 4i 52 Tc 1S 14 13 14 1r 1? 21 22 1T 23 24 30 31 Suaor 250 223 267 352 48S 496 749 1.364 1,373 1.249 1,397 1.4S0 1,417 Tobacco 69 74 76 72 68 73 101 103 97 100 104 156 1S9 Pepper 27 23 3? 43 46 47 39 34 46 4 41 40 Cotton 3 2 1 1 1 1 6 10 13 13 I1 4S 52 Palt .l 0 0 0 0 0 0 0 0 0 0 0 0 0 Patl kwrnl 0 0 0 0 0 0 0 0 0 0 0 0 0 Private estates Ruibbr 108 109 104 107 110 112 111 114 125 133 121 124 115 Cocomat/cop 6 5 S 6 21 21 22 23 I1 14 13 1s 16 Coffeo 7 6 6 6 7 a 6 6 6 a 9 10 10 Ctowes 0 0 0 2 0 0 0 0 0 1 1 I 1 Too 11 10 11 11 1S 16 17 18 16 17 10 17 18 Swar 127 126 152 162 7n 73 114 116 72 so as 106 106 Tobaeco 0 0 0 0 0 0 0 0 0 0 0 0 0 P,ppr 0 0 0 0 0 0 0 0 0 0 0 0 0 Cotton 0 0 0 0 0 0 0 0 0 0 0 0 0 Pat- oit 104 126 145 14u 165 168 202 206 285 269 329 330 346 Peltkernet 21 24 27 29 22 23 36 37 47 68 69 71 73 2ovsrnwent estates ... .... ... .. .... liMtes 136 137 142 147 162 170 166 192 189 201 205 211 216 CoCoswt/cOpe 0 0 0 0 0 0 0 0 0 0 0 0 0 Coffee 10 10 10 10 10 11 13 13 13 10 1S 13 13 Clo-es 0 0 0 0 0 0 0 0 0 0 0 0 0 Tea 40 46 49 S1 59 92 68 70 61 le 04 60 S7 Susr 660 875 902 924 960 1,030 966 220 102 271 330 343 343 Tobacco a a 11 12 13 14 15 15 9 9 4 5 5 Pepper 0 0 0 0 0 0 0 0 0 0 0 0 0 Cotton 0 0 0 0 0 0 0 0 0 0 0 0 0 Pate oft 244 271 2J 336 367 474 499 542 S9 710 814 904 923 Paelkernel S2 sT 56 64 72 a 90 95 110 97 IT? 157 192 Total Ru1**r 81T 782 356 838 064 890 1.002 1,066 9D0 1,00 1,033 1,055 1,060 Coconut/copI 1.341 1,37S 1,532 1.S19 1.S75 1.562 1.7S9 1.812 1,718 1.604 1,747 1.920 2,091 Coffee 149 160 194 197 223 22t 285 29 201 305 315 311 396 Ctoves 15 1S 17 39 21 35 39 40 32 41 49 42 53 Tea 6 70 73 76 91 125 106 110 94 110 126 127 136 Supr 1,237 1,227 1,321 1,436 1.S16 1,601 1,831 1,700 1,627 1,625 1,010 1,599 1.866 Tobacco 7 62 8T 84 61 8 116 116 106 109 106 161 164 Peppe 27 23 3T 43 46 47 S 39 34 46 46 41 40 Coton 3 3 1 1 1 1 6 10 13 13 11 45 52 Patm ol 348 39 431 465 S32 642 701 748 884 979 1,143 1,243 1,269 Pal kernt 73 5l a3 93 94 10S 126 13S 15 165 24 255 265 le Preliminery flgures. Source: Sut Lt to Presd nts' epwrt to Pail n, Augut 15, 197. - 190 - Statistical Annex Table 7.3 COOTYt ECOaanIC REPOT Rice - Are HNrvested, Production and Yield. 1974-1986 ., _. .......... .. ....._........ .. . _........... ...................................................... _........... Area Averae Paddy Rice Year harv sted yield output output /a ('000 ha) (tons/a) ('000 tons) ('000 tons) ......... .......................................................... . _... 1974 8,509 2.6 22,464 15,276 1975 8,495 2.6 22.331 15,185 1976 8,368 2.8 23,301 15,845 1977 8,360 2.8 23,34? 15,876 1978 8,929 2.9 2S,M 17,525 1979 8,850 3.0 26.283 17.872 1980 9,005 3.3 29,652 20.163 1981 9,382 3.5 32,774 22,286 1982 8.968 3.7 33,584 22,83 1983 9,162 3.9 35,302 24,006 1984 9. 74 3.9 38,134 25,933 198S 9,902 4.0 39.033 26,542 1986 /b 9,896 4.0 39,388 26,784 ... .. ............. .._.. ... , ,........ ... ... ....,.. /a Estinsted on the bafs of a convers on factor of 0.68 from paddy Into rcoe. /b Prt lfmnary figures. Source: Central Burew of Statistics. - 191 - Statistical Annex Table 7.4 CaiY EONIC TEi VULOG Nice Prom, 197/79 - 19/UA ...... ....................... ........................., 4.0.0 tons) 197/79 1979/80 1980/81 1961/02 19 3/6 1964/85 195/86 1986/87 /c 19788 / Begining stock 459 708 8 1,242 1,623 1,045 1,453 2,387 2,122 ,7M Domestic prur_mt 861 431 1,635 1,952 1,933 1,195 2,374 1,943 1,586 1,250 I"?rtt 1,268 2,580 1,213 437 56 1.11S 187 0 41 136 PL-40 304 353 101 46 0 65 54 0 0 0 Odwr food / 15 327 196 48 0 140 0 0 41 136 Cinrctal 949 1.9W0 914 343 306 910 133 0 0 0 Total atilObilty 2,608 3,719 3,734 3,631 4.062 3,355 4.016 4,330 3,749 3,161 Distribation /a 1.852 2,84 2,480 2,014 2,972 1,872 1,612 2,186 1,f94 2,333 .... .................... ..... .. .... ..... ....... ..... ....... ..... ....... ..... ....... ..... ..... ovn t m 66608 6 69 806 1,320 1,373 1.368 1,414 1,498 1,S11 Stt nterpil 106 90 89 95 105 89 59 7R 94 102 Nerket opretlo /f 1,032 2,036 1,628 1.033 1,518 3S9 69 277 175 600 Otr /d 106 42 114 80 29 11 116 418 187 120 La" 46 a 12 26 45 28 17 22 20 35 End stock 706 806 1,242 1.591 1,045 1,455 2,387 2,122 1,775 793 N_mranim item: ................ nice prodAction /b 17,325 17,872 20,163 22,286 22,837 24,006 25,933 26,542 27,014 27,202 na Slnc Jum 1962, all region he reeved rice fn kind, frmrly, suptus regm recilved food allownce in moy. b On catler Ver besis. lc Prowvsonml ffiures. /d Inc liW export of 95,000 tons in 1964/ cnd 480,000 tom In 1965/86, 201,000 toas In 19887 an 100,000 ton in 1967/S. I. In 1966/7, the fire show repmnt of rice lown. /f Includm special sate at re&ac pres of sAmrket standard rice of 130,000 tons in 1985/86 and 150,000 ton in 1986/87. Istimtes. Swim: EULOS (Bedan Uruumn Logiftic/State Logistic Sord). - 192 - Statistical Annex Tagle 7.5 IWONESIA CUITRY ECtIC REPORT ....................... Are Covered IMder RI1e Inttlf icattan Progrm, 1974-1986 ........................................................... cO000 he) ._.__................... .................._................. Yvw sIAS Of ,idch IES Of weich Total /a I1SS /b /A INSUS _. .... ............... ................................. ......... .................. ._....... . .............................................. .. ........ 1974 2.676 0 1,0U8 0 3,724 1975 2,683 0 1,96? 0 3,640 1976 2,424 0 1,189 0 3,613 1977 2.059 0 2,181 0 4,240 1978 1,960 0 2,U8 0 4,868 1979 1,571 0 3,452 0 5,023 1980 1,374 420 4,142 640 5.516 1981 1,384 S87 4,802 1,119 6,186 l962 1,296 832 5,047 2,113 6,343 1983 1,308 882 5,387 2,59f 6,695 1964 434 278 6,936 3,528 7.370 1985 200 104 7461 3,996 7.661 1966 58 135 ?,S33 4.345 7,791 ......................................... ............................................................................ /a SIl S B- b3ingan mmat (Nas rice pltnting guidne progrm). /b INSUS a Intesiffikasi khusu (Specatl intenf ficatfen progrm). /c INNAS u Intemifikasi mal (Nasa lntesification progrm). Sore: Suplptant to the rresidentes Report to Parltomnt, Auust 15, 1987. INDONESIA 00UR ECOUeIC REEPORT ....................... Idx of Nmfecturlun Prode tfon by SeleCted Irdatry 0rmp, 1975-17 /e (1975 a 100) code of Inidatry OesrptIon lb 1975 1976 1977 1976 1979 190 191 1982 196 19" 19t5 1966 197 1c ................... ........................................_....... ..................................... 31121 Cndmssd 6 dried ilkt, creemry N proces butter, fresh end preervad crem (4) 100 148 17 173 201 234 235 239 261 220 207 197 203 31330 altt liquor an wit (4) 100 94 103 105 118 129 147 170 144 107 119 125 143 31420 Cton cigarettes (20) 100 104 125 122 120 151 180 187 196 224 246 267 m 31430 Other cgrtte (13) 100 104 105 116 131 130 125 115 120 117 97 66 76 32111 Yarn end thread (20) 100 109 101 112 111 116 126 121 114 123 111 115 130 32112 WavIng mills (except jute weaving prowtstl9(13) 100 108 109 112 122 126 139 130 121 125 127 132 146 32114 Batl (10) 100 114 113 117 117 117 99 110 106 114 100 101 107 32130 Knitting lfts (32) 100 95 89 90 77 8 89 81 a2 80 64 89 65 w 32400 Footr (4) 100 114 115 119 112 130 123 124 153 179 173 174 162 33113 PwWood (6) 100 118 197 218 220 392 471 424 438 418 367 429 497 34111 Pew inutfacture C(al kindc) (8) 100 96 10T 134 151 153 152 152 129 164 182 206 231 35110 &aic chelcals (except fortilizer) (13) 100 97 97 87 124 126 127 130 132 147 149 155 157 3S20 Fortillzr (5) 100 63 161 192 336 46 492 496 560 706 650 930 652 35210 Paint, varnish, e1 lacquers (7) 100 97 92 101 98 11S 159 16 147 164 19 199 161 35232 fttes (7) 100 103 113 124 139 179 189 230 291 323 389 395 462 35S10 Tyre NW tes (12) 100 137 168 203 227 257 301 294 300 300 311 329 352 36210 Gas end gtSs produets (17) 100 94 139 160 171 208 257 209 227 247 250 244 316 36310 C ent (9) 100 125 17S *255 314 367 395 419 566 616 666 767 783 37100 lali iron and stee( indbstrses (15) 100 137 141 180 43 1034 1248 970 1147 1165 156 1359 1385 38130 structural metat prodncts (24) 100 109 133 154 1 172 188 196 203 197 214 218 252 38312 Orycell batteries (12) 100 115 149 165 180 228 231 267 328 316 343 358 355 38320 adIo, TVs, cassettes, other coumnletlon upaIemnt and epperatus (16) 100 125 160 232 230 340 349 333 351 279 243 217 192 38U30 otor veh1cles assembly and 3 TA acnteture (17) 100 108 122 136 117 194 256 227 19 179 183 211 246 " 3J440 Notor cycles and three ssel omtor vehicles, F at assembly nd nuafacture (5) 100 S9 76 89 75 114 161 1UT 130 93 100 128 114 0Drt aneral ndex 100 109 125 14 158 194 214 214 229 241 258 275 260 .............b /a e TM nal figures hwn here are calculated as the average of quArterly Indices. lb Ffgre In brackets C)* indicate the mmber of establishments covered in that groeW. /c Averae of three quarters. Sourets Central Bureau of statistics. CoIuIRYm ECONUIC REPRT Prodiction of Ninerrle, 1974-1986 ................................. Tin Copper ore Nickel Iron sand Natural year Petroltiu ewoentrate corcentrate ore Senmite Coal concentrate Gold Silter gO Cnin Mels) ......--(---1'000 tos)------ (kg) (kg) (act) 1974 502.0 25.7 212.6 878.9 1,290.1 156.2 365.2 265.3 6,4U .6 202.2 1975 477.0 25.3 201.3 801.1 992.6 206.4 353.0 330.7 4,734.7 222.2 1976 550.0 23.4 223.3 1,102.0 940.3 182.9 m2.3 355.2 3,397.5 312.1 1977 615.0 25.9 189.1 1,302.5 1,301.4 230.6 311.5 255.9 2,831.9 542.8 1973 597.0 27.4 180.9 1,256.5 1,007.T 264.2 233.3 253.9 2,506.4 820.1 1979 5S0.0 29.4 18B.8 1,551.9 1,051.9 278.6 79.9 170.0 1,644.6 99B.4 1960 577.0 32.5 186.1 1,537.4 1,249.1 338.0 62.9 247.9 2,196.0 1,0W5.7 1961 584.8 35.4 188.S 1,543.2 1,203.4 392.8 86.6 183.1 2,000.2 1,123.8 1962 486.2 33.8 223.7 1,640.9 700.2 568.0 144.5 222.7 3,057.9 1,111.9 1963 490.5 26.6 205.0 1,2?3.0 M7.9 648.2 132.9 259.5 1,7M5.? 1,186.4 & Ca 19S4 516.5 23.2 190.3 1,066.8 1,003.2 1,468.2 83.0 239.1 1,999.7 1,506.7 t 1985 483.8 21.8 223.4 961.9 830.5 1,491.7 130.9 235.4 2,15.0 1,580.0 O 1986 507.2 24.0 251.2 1,533.1 648.8 1,725.4 152.3 201.5 2,530.0 1,628.9 0 ...................................................................................................................... ................................... oSwc:o Central Bureau of Statistfes. CONT ECOGIIUC NMI .......... ..............................._ trud 01 Production by Cawmy, 1974-1W67 .......................................... ('000 bbt) ......... .... .... ..... .... .... .... ..... .... .... .... ..... .... .... .... ..................... Contect of work Production Avere ^jw;---v*-9-- -------...........- sbari,r dafly PERTtNA LENIGaS e tex C St S,btotal acntrat Total, output .............................................................................................................. 1974 40.143 362 329,97 1,959 16,626 346,492 112,840 SO1.67 1,375 1975 32,590 306 300,79 1,944 13,839 316,712 127,247 476.855 1,306 1976 31333 26 304,616 1,60 12,rB8 319,206 199,5)2 550,319 1,S04 l177 30,706 285 292,950 2,45 11,974 307,3s3 277.62 616,186 1.688 197 31,273 195 275,349 2,266 11.853 289,46e 275,762 S96,698 1,635 1979 30,253 213 266,048 1,856 10,611 278,715 271,203 S80,384 1,590 1960 29.612 205 256,325 2,046 11,577 271,9 274,971 576,s36 1,576 1961 29,398 176 25S,515 1.7"9 13,141 270,4SS 284,694 584.r23 1,602 1992 27,2S0 196 175,926 1,422 13,214 190,564 270.055 486,095 1,337 1963 /a 2V,374 233 233,790 203,134 46,S31 1,273 196 31,421 20 5,767 431,121 466,512 1,280 1965 30,211 170 6,421 394,436 U1,238 1,81 6 10 1966 29,321 193 7,327 470,367 507,228 1,390 10 3 1987 /b 24,554 198 9.649 U4,317 476,716 1,312 w t. .............................................................................................................. /I Since Noy 1963, contract of work data hae been onseotlidted. ib Prolamnry figures. SWor: Ninistry of Nines an Enery. Directwate Genrwa Oil & Gae. SUOESIA cuMMU ECOsaIC REPORT Petrolem Product W4ply wd Dowd, 1974-1987 ................................. .................................................. (atLlion bbts) ............... ...................................................................................... 1974 1975 1976 1977 1976 1979 1980 198 1982 1963 194 1985 19 1967 la .................................................................................................................................. ................................................................................................... Pr.adctIon of crde 501.6 476.9 550.3 615.1 S96.8 560.4 s77.0 S84.8 488.2 454.5 468.5 431.2 507.2 479.1 Crude impos 2.7 2.6 7.7 29.7 31.1 30.5 32.9 37.0 22.0 25.7 34.2 32.1 27.7 30.2 Subtotal 504.5 479.5 558.0 644.8 627.9 610.9 609.9 621.8 S10.2 480.2 502.7 63.3 534.9 S09.3 ........ ..... ..... ..... ..... ............................................... ..... ..... Crue exports 378.9 363.1 "9.5 485.3 472.0 410.8 378.6 363.4 320.9 330.2 354.6 295.1 327.4 291.9 Crude avaflable for refineries 125.6 116.4 108.5 159.5 155.9 200.1 231.1 238.4 189.3 150.0 148.1 168.2 207.5 217.4 Changes In crude stocks (decras *-) 0.7 3.0 -5.2 5.7 -3.6 14.1 38.2 44.7 6.7 -34.0 -42.6 -31.6 -10.0 -16.4 Refinery irput (including saps) 124.9 113.4 113.7 153.8 159.S 186.0 192.9 193.7 182.6 164.0 190.7 199.8 217.5 233.8 .............. ..... ..... ..... ..... ..... ..................................................... Ref inery e Aptlon 7.7 6.7 6.4 11.2 9.4 13.0 13.5 6.5 6.5 7.2 9.2 21.0 14.2 15.2 Refery output 117.2 106.7 107.3 142.6 1S0.1 173.0 179.4 187.2 176.1 176.8 181.5 178.8 203.3 216.6 ............... ..... ..... ..... ----- ..... ..... ..... ..... ..... ----- ..... ..... ..... ..... Exports of refined products 45.1 36.7 41.8 51.4 40.3 49.3 53.4 49.9 39.0 43.3 66.0 47.3 55.2 62.4 .......... ................................. ...... ---- ......... --- ...... ... . . .... .. .. ... .. .. .. . ..... .... .... ........ ..... ..... axy resid 41.3 32.6 35.2 42.1 36.3 48.9 51.0 47.9 33.7 40.5 49.9 32.1 34.9 42.2 unker fuel, AVtIMU tc. 3.8 4.1 6.6 9.3 4.0 0.4 2.4 2.0 5.3 2.8 16.1 15.2 20.3 20.2 Available for dmetic conAption 72.1 70.0 65.5 91.2 109.6 123.7 126.0 137.3 137.1 133.5 115.5 131.5 148.1 156.2 ......................... .... ---- .... .. .. .. .. .. .. .. .. .. .. .. Prodect iworts 12.8 15.0 30.4 18.3 16.9 15.0 22.0 42.6 26.0 23.5 5.0 2.7 5.4 10.3 Totat supply 84.9 85.0 95.9 109.5 126.7 136.7 148.0 179.9 165.1 157.0 120.5 134.2 153.5 166.5 ............ .... .... .... ......... ..... ..... ..... - ..... ..... ..... ..... ..... ..... m Ometic comiption 67.9 77.5 87.7 98.5 113.0 134.3 141.8 156.0 161.1 155.5 157.6 155.3 1S2.8 162.9 |0 Chacn in refined stocks 17.0 7.5 8.2 11.0 13.7 4.4 6.2 23.9 4.0 1.5 -37.1 -21.1 0.7 3.6 ...................................................................................................................................................... /a Prolimidnry figures. Soaws Ninfitry of ines an Enewg o Directorat Genera l Ofl & oa. INOhEIA CounTY ECtC REPORT Destfe Sales of Petroleum Products, 1974-1987 /a ............................................... ..................................................... . ('000 bbLs) 1974 1975 1976 1977 1978 1979 1960 1981 1982 1963 1984 195 1986 196 /b .................................................................................................................... ............................ viationon 139 139 143 128 134 134 130 110 103 83 73 66 63 S4 viatton turbo 2,150 2,579 2,758 2,913 3,494 3,656 4,355 4,869 4,899 3,686 4,374 4,42 3,606 4,199 r" up "NsotIne 496 "61 706 710 728 618 466 392 238 247 523 736 1,024 1,431 wtulr gasoline 12,787 14,284 15,606 17,356 19,608 21,295 23,321 25,648 25,709 24,380 24,909 25,206 27,083 29,048 Oros"'e 26,769 30,623 33,259 36,880 41,717 45,457 48,975 52,497 51,778 48,224 45,213 43,954 43,618 43,352 otor disl 14,524 18,023 22,749 27,04 31,709 34,S95 40,116 44,737 48,918 49,790 48,567 47,662 47,421 54,075 otrf.t diesel 4,022 4,673 5,429 6,239 6,74T 7,581 7,829 9,391 9,311 9,976 10,265 10,329 8,655 8.319 do.1 .11 8,75S 7,644 8,222 10,296 11,061 13,626 15,739 17,587 19,341 21,149 23,625 22,60 18,004 19,054 Total 69,62 78,86 8&.8fl 101,563 115,195 126,962 140,931 155,231 160,297 157,53 157,S69 155,280 149,874 159,532 ..... ..................... ...... ........... ...... ........... ....... .............. ....... .............. ....... ............. ....... ............. ............. .......................................... .............. /a Etucfinr lubricating oil snd stellar products. /b PrNminarsy figz1s. Soce: Nfnistry of Mines a Energy. Directorate Gwwal 011 md On. rt _ - 198 - Statistical Anne Table 9.1 INDONSIA COUNTRY ECNOMIC REPORT ....................... Conu_r Price Index, 1979 - 19? s (Aprit 1977 - Irach 1978 a 100) ... ...... ........................................................................................ End of Foodtuff Housing CLothinr Others Total CivAs CZ) 1979 141.1 140.9 168.2 137.7 13.1 21.8 /b 1960 165.6 168.7 190.8 159.1 167.6 16.0 1981 179.3 182.3 198.2 168.8 179.8 7.1 1982 192.7 209.8 205.0 189.3 197.9 9.7 198 212.7 238.1 214.0 221.5 221.5 11.5 1984 226.4 270.0 220.6 246.5 241.6 8.8 196S 230.9 289.4 226.0 259.? 22.2 4.3 1986 263.9 302.9 250.4 275.0 275.3 9.2 19? 296.1 321.5 270.4 29.9 300.8 9.3 /a The consur price index for Indonesia has been used Pncg Norch 1979 to repwlce the Jakarte cost of ltving Index. /b Percentage chae of CPI for the eriod Jwsry throug iiecahr 1979 wing the rate of increase of the Jakarta ecst of Living index for period Jaury throuh oarch 1979. Source: Central Sureau of Statistics. - 199 - StatistiLcal Annex Table 9.2 IWESIA ..... ........ X.... Ind Ies Wboltes Price index, 1963-1987 /a .................................. ....................................................... .. (1963 - 100) Sectors lb 196 1964 19U 1986 1987 ftriculture (44) 100 113 l1i 128 145 Nining & qimrrying (6 100 109 117 125 132 Nluutacuring (140) 100 10 115 123 143 Imports (53) 100 113 119 129 158 Expwrt (38) 100 111 112 85 118 ............ ---.... ............... .... ... . ..... ... Excl.uing petroleim (4) 100 114 115 130 170 Petrolm (4) 100 112 113 73 103 eeal irdex (281) 100 111 116 116 142 ......... ............................ --- ... .... ... . ...... Genwea Index aectuding exports (243) 100 111 117 127 151 Genra Index excLuding eprts of petrolte (224) 100 110 116 125 146 la This ne index replces the previou PI W ased n 1975. Floure dsw the avrae for year. /b Figures within bracets 00* indicate the nmer of Itm represented In that sector. Source: Central Bureu of statistics. INDOIESIA COuWTRY ECONONIC REPORT Domestic Prices of Petroleu Proidcts, 1974-1967 ....................................... (Rp.ft Iter) ....................................................... .......................................................................................................... ................................... ......................... 1974 1975 1976 1977 1978 1979 1960 /a 1981 1982 /b 1993 /c 1964 /d 1985 I 1986 1987 ............................................................................. ........................................................................................................................ -,---------- Aviation go 50 62 70 70 7o tO0 1S 150 240 300 300 330 250 250 Aviatien turbo S0 62 70 70 70 100 150 150 240 300 300 330 250 250 Pra_1A woline 55 67 90 90 90 140 220 220 360 400 400 440 440 "0 Ruuler otine 6 5T 70 70 70 100 1S0 150 240 320 350 385 385 385 Keron 13 16 18 18 18 25 38 38 60 100 150 165 165 165 I Notor diel 19 22 25 25 25 35 53 53 aS 145 220 242 200 200 Industrial diesel 13 19 22 22 22 30 45 45 75 125 200 220 200 200 Fuel @11 12 19 22 22 22 30 45 4S 75 125 200 220 200 200 ..... ....... -.- .............. --....--.................,... ..................................... / rm Nay 1960. /b Price ineresed an Janry 1. /a Price lncreas en Jwmry T. /d Prie Increemd en Jwwmry 12. /h Price increased an April 1, da to the appllc tt1n of 10X VAT. Source: Ninhstry of Nines and Energ O Directorate Cenral OIl on . 0rt 1 .. '-f coNTRY E00ISMIC REMOT .........C......T.. Approved Forelg Inmestmit.by S tors! 977-r1987 (US nit lfen) ........................................................................... ............................................................................................................................................. ........... Sector 1977 1978 1979 1980 1961 1982 1983 1984 1965 1966 l967 ................................................................................................................................. ............................................................................................... Agriculture 21.4 3.0 16.2 56.0 25.0 9.0 9.6 0.2 9.0 125.9 116.7 Forestry 26.5 38.6 12.1 8.2 115.2 32.4 6.5 0.0 0.0 0.0 4.6 FIshery 2.7 23.1 21.1 2.9 21.6 3.0 20.9 0.0 11.3 3.9 12.0 NInIni & quarryfng 200.5 38.1 65.5 3.0 28.5 0.0 0.0 0.0 0.0 0.0 0.0 Nbnufseturing 327.4 274.8 1157.-! 770.9 863.8 1,120.0 2,615.2 1,001.7 667.3 536.7 661.0 ........ ..... _ .. ._.. .... .. .!_..... .. ._ ___. _.... ....... ......... ..... .__..... ... & {t '411tt1l 0 !4 XQ i Construction 0.8 5.4 0.5 7.7 48.8 11.0 43.5 17.0 122.3 44.7 41.7 Trade 4 hotels 7.0 9.7 3.0 38.6 0.0 17.0 78.0 84.0 0.0 0.0 196.0 .......... ............. .. ............ .......... ... Uorale trde 7:8 3:8 38:2 8:8 9:8 788 a2:8 8:8 8:8 a4:8 Transport & coimicatlons 0.0 0.0 0.2 25.1 0.0 0.0 0.0 4.2 0.0 70.0 213.0 teal evtat. ane d bunnes 20.3 4.4 43.9 0.0 18.2 204.2 108.3 0.0 28.9 25.0 22.9 Total 608.6 397.1 "320.2 912.4 0 1396.6 2,682.2 0 858.8 826.2 ""6.9 .... ...... . .......................... ..... ...... ........................................................................... ..................................................................................................... /a Inten*d Copf tat Investment. Amurit reprelts original approas plus expnsons minus canctlLattons. Source: Buk Indonesia and Innstment Coordinatfng Bard (KPN). Ift o 0 '-f INDONESIA COUNTRY ECONOMIC REPORT ....................... Inlementetlon of Foreign Investment by Sector, 1977-1987 /a ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~......................................................... ......................................................................................................... . CUSS mut1 lon) Sector 1977 1978 1979 1980 1981 1982 1983 1984 1985 1966 1967 /b ............ ............................................... .......................... .................................................................................................................................... Agriculture 12.5 10.1 4.3 14.5 13.0 5.8 6.7 4.1 3.7 4.0 1.2 Forestry 22.1 15.0 19.2 26.2 34.9 11.0 15.9 16.3 2.7 0.0 1.7 Fishery 2.8 13.5 10.5 7.9 0.4 9.0 5.8 0.7 0.2 0.0 0.0 Ninfis and quarrying 20.1 57.3 47.5 49.4 70.0 32.2 110.0 46.1 31.0 265.0 8.6 Namafacturing 186.2 267.0 192.0 235.4 243.5 388.3 358.0 233.7 468.7 180.4 28.4 ...... .................. ......... . ...... ----- ..... ..... -----... ....... .... . ..... ......... fin te *ato-ts Construction 3.0 1.4 12.0 0.8 0.6 6.9 0.5 0.5 1.8 5.4 1.8 Trade & hotels 6.2 17.2 4.3 0.4 2.9 0.0 2.1 7.2 8.7 7.3 0.0 tot°eale trade 85 a 8: a 2 8:8 9 L7 n7 . 8 7 n Transport & communicatIons 2.0 4.7 21.9 4.8 1.3 0.0 0.0 2.4 1.0 0.0 0.0 am = r°aticns I' ZU 3 2i-i z 7 0.2 8:8 8:8 2 o8 8:8 8 Realestate business services 3.9 19.0 6.9 7.2 12.4 6.1 17.9 77.0 80.8 27.9 0.0 Total 258.8 405.2 318.6 346.6 379.0 459.3 516.9 388.0 598.6 490.0 41.7 ........................................ ............................................................................................................................................................. ......................... fc 5 cj V3M g tment In petroleum and banking sectors. Source: Bank Indonesia and Investment Coordinating Board (SIPIO . 0rt rt 0I. IUDoXESlA COUNTRY ECONOMIC REPORT ......... ............................._ Approved Donustic Investment by Sector, 1977-197 /a ................................................. .......................................................... (Rp bfilfon) ......................................................................................................... ............................................................................................................ Sector 1977 1978 1979 1980 1981 1982 1983 1984 1965 1986 1967 /c ......................... ...................................................... *.................... ............................................. . .............................. ..... ............... ..... .. Agriculture, fisheries and livestock 49.4 100.4 39.0 30.0 60.0 62.0 681.0 277.0 899.0 1,679.0 2,584.0 Forestry 64.0 58.5 80.0 115.0 175.0 93.0 149.3 19.0 37.0 21.0 640.0 Mfning 0.0 18.3 33.0 55.0 13.0 52.0 578.1 7.8 38.0 89.0 266.5 MhnufacturLing 401.4 531.2 580.0 1,093.0 1,306.0 1,419.0 3,791.5 1,332.3 1,411.1 1,842.0 4,939.6 ............. ..... ..... ....... ....... ....... ------- ....... ....... ....... ....... Textiles 75.0 167.6 61.0 162.0 195.0 110.0 103.5 127.0 97.0 262.0 1,163.7 ChemicaLs 98.7 103.0 141.0 57.0 193.0 205.0 765.9 272.0 928.0 814.0 1,865.5 Electrical goods 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other manufacturfng 227.7 260.6 378.0 874.0 918.0 1,104.0 2,922.2 933.3 386.1 766.0 1,890.4 Construction 0.0 2.6 5.0 4.0 8.0 16.0 195.3 67.1 269.6 75.0 37.2 Hotels 4.1 11.6 13.0 10.0 54.0 76.0 255.2 213.9 312.0 17.0 136.6 Reat estate 35.2 15.0 6.0 16.0 5.0 74.0 204.0 31.0 168.0 168.0 128.0 Others /b 19.9 24.2 18.0 35.0 70.0 157.0 1,151.0 1.0 278.5 326.0 562.4 Total 574.0 761.8 774.0 1,358.0 1,691.0 1,949.0 7,005.4 1,949.0 3,413.2 4,417.0 9,294.3 ................. ................................... ...... ........... ................... .... ... ....... ..... .... ................................ ........ ..............w /a Figures refer to intended capital investments, and represent originaL approvals ptus approved expansion minus cancellations. /b Inctudes transportation sector. /c Up to Noveaber 1987. Source: Investment Coordinating Board. STANDARD TABLES FOR INDONESIA National Accounts Summary at Curront Prica (In billions of national currency unit.) 1976 170 1960 1981 1982 1068 1984 1986 1ow Origin and Use of Resource A.&. GDP at mrket price 24,002 84,845 48,914 58,421 02,U88 78,606 07,055 94,498 90,474 2. Noet indirct taxes 1,029 1,806 1,685 1,752 2,188 2,547 S. GDP at factor cost 22,978 88,040 47,279 56,"9 00,614 71,161 4. Agriculture 6,745 9,874 11,728 1,049 15,001 17,6096 20,"4 22,41 25,024 5. Industry 6,678 12,944 20,405 24,076 28,746 27,801 82,479 84,168 80,504 a. Manufacturing 2,610 4,008 6,858 7,067 7,462 0,211 11,082 12,676 18,642 b Mining and quarryino 4,268 6,866 11,286 18,216 12,158 18,966 16,90 15,404 10,741 c. Other (by dlfference) 1,409 2,075 2,818 8,792 4,110 5,122 5,412 6,068 ,221 6. Service, etc. 8,680 12,027 16,768 20,696 28,001 28,701 84,241 87,917 40,946 6.1. Resource balance 687 2,402 6,277 2,807 258 -707 4,8U 1,834 266 2. Exports of goods A NFS 6,817 10,140 1.6,162 16,402 15,825 20,448 22,#96 21,671 21,165 8. Iports of goods NFS 4,780 7,746 9,166 14,084 15,071 21,285 18,027 19,680 20,667 C.1. Domestic absorption 28,416 81,948 42,687 60,054 62,808 74,485 82,697 0,650 96,176 0.1. Total consumption, etc 17,692 22,794 80,742 U8,746 46,162 52,617 60,520 67,751 71,920 2. Privaet 15,126 19,516 26,560 82,208 87,924 44,709 51,J99 56,858 60,501 a. Statistical discrepancy i 0 0 0 0 0 0 0 0 8. Gneral government 2,656 8,277 5,14S 0,452 7,229 0,077 9,122 10,893 11,829 E.1. Grors domestic Investment 6,784 9,160 11,896 17,809 17,241 21,608 22,177 24,900 24,256 2. Fixed investment . . . . . . . .. 8. Increas In stocks . Memorandum Itms: 0.1. Nt feetor income from abroad -402 -1404 -2011 -1926 -8080 -8860 -4168 -8082 -4058 2. Net current transfero from abroad 0 0 0 0 0 9 54 s 91 8. Oross national product 28,540 82,660 46,908 56,496 69,611 70,886 62,867 90,561 92,421 H.1. Oroos domestic saving 6,821 11,561 10,171 19,678 17,494 20,601 26,654 26,741 28,478 2. Orer national saving 0 0 0 0 0 17,581 22,421 22,078 19,819 1.1. Exports of goods and NFS as per BOP 4,974 9,629 18,849 15,084 18,894 17,490 21,676 21,518 19,547 a. Differnce wlth NA (l) -7 -S -17 -9 -14 -17 -5 -1 -8 2. Importf of goods and NFS a pr BOP 4,742 7,556 10,060 1,8,08 15,025 20,087 19,760 190,18 20,770 S. Difterence uilth NA 0 -8 2 -8 0 -6 6 0 -5 8. Net factor Incme as per -07 -1404 -2011 -1941 -1900 -8819 -4106 -04 -4125 a. Diffenncs w/ NA (9 of lm I.1) 8 0 0 0 -0 0 0 0 -1 4. Net current transfere s per S 0 0 0 0 0 9 54 a 91 a. Differnc w/ NA (S of lI n, .1) 0 0 0 0 0 0 0 0 0 Exchange rates: J.1. IFS conerslon rats 442 628 62 682 661 909 1,026 1,111 1,268 2. ZEC Convrslon rat 442 628 627 682 661 909 1,026 1,111 1,268 STANDAD TAILE FOR INDONESIA .titonal Accounts Sumar at Constant 1688 Prica (In billions of natIonl currency units) 1978 1t9 1900 t1oo 1902 19 1964 16 196 Origh and Us of Resources A.1. GOP at markt priac C8,190 61,777 66,675 71,618 71,877 78,60 76,145 90,014 68,160 2. Nab lndiroet taxes 2,405 2,847 2,229 2,148 2,430 2,547 8. GDP at factor cost 5,605 59,480 0,446 69,466 60,947 71,151 4. AgrIculture 14,881 15,830 16,899 17,187 17,871 17,606 16,481 19,209 19,784 5. Industry 24,6109 25,575 27,544 26,47 26,079 27,801 29,508 29,678 80,06 a. Manufacturing 5,106 5,052 7,804 7,676 7,978 6,211 9,770 10,500 11,162 b. MIning and quarrying 16,804 16,098 16,076 18,340 18,676 18,906 14,789 18,961 14,572 c. Otor (by difference) 8,148 8,581 4,162 4,729 4,08.0 5,122 4,944 5,108 6,255 6. Soe"rc, ae. 19,190 20,864 22,782 25,479 27,827 26,701 80,210 $1,182 82,457 5.1. Resource balance 12,061 11,264 11,810 1,687 -647 -787 4,013 1,919 2,"9 2. Exports of goods & NFS 24,255 24,610 26,162 21,457 19,524 20,448 20,63 16,916 21,687 8. Impot of goods NFS 12,194 18,547 14,66 19,890 20,171 21,285 16,644 16,906 16,796 C.1. Domestic absorption 46,129 60,613 55,866 70,047 72,024 74,495 74,126 77,092 60,841 0.1. Total consumption 84,976 88,285 42,911 47,250 60,402 52,617 65,251 57,016 58,679 2. Private 29,848 2,491 86,087 89,699 42,172 44,789 46,890 48,041 49,6 a. Statistical diserpancy 0 0 0 0 0 0 0 0 0 8. Genral governmnt 5,126 5,748 6,674 7,561 6,280 6,077 ,85 6,975 9,241 E.1. Gross dometic Investmnt 11,158 12,279 12,448 22,797 21,622 21,669 18,8t6 21,079 21,462 2. Fixed investment .. .. .. .. .. .. .. .. S. I lrease In stocks .. . .. .. .. .. .. .. .. Mmeranduh Its: : 0.1. Net facor Income from abroad -1120 -2670 -2741 -2860 -8459 -U6 -8702 -856 -651 2. Ntcurre transfers from abroad .. .. .. .. .. 9 49 57 76 8. Gross national product 58,150 56,746 60,068 6,071 66,861 70,8U8 74,442 70,484 79,629 ".I. Gross domestic saving 12,665 18,476 21,666 26,162 21,981 20,681 22,745 22,564 17,941 2. Gross national saving 7,641 10,480 16,871 21,408 19,066 17,581 19,058 19,279 14,388 1.1. Capacity to imort 18,706 17,747 24,804 28,245 20,609 20,446 20,416 16,687 16,597 2. Term of trade adjustment -10649 -7064 -1678 1,768 986 0 -148 -848 -5007 8. Gross domtc lco 47,641 54,718 64,797 78,401 72,868 78,66 77,097 9,56U 76,567 4. Gross nattonal Income 42,002 46,682 59,111 60,459 69,U87 70,886 74,295 76,902 72,7U8 STANDARD TABLES FOR INDONESIA Implicit Doflators for National Accounts (In natlonal currency 1989 = 100) 1978 1979 1990 1981 1982 1983 15 W 1995 1986 Origin and Use of Resourcs A.1. GCP at mrket pries 41 s6 78 62 68 100 111 lie 11C 2. Net lnd1rect taxes 41 s6 78 92 e8 100 3. GDP at factor cost 41 s6 73 62 68 100 4. Agriculture 47 61 72 79 86 100 110 117 127 S. Industry 86 51 74 6s 69 100 110 115 98 s. Manufacturing 66 67 67 90 94 100 113 120 121 b. linlng and quarrying 26 48 70 81 88 100 108 110 74 c. Other (by difference) 48 59 68 80 85 100 109 119 118 6. Service, etc. 45 B8 74 61 88 100 118 122 126 B.1. Terms of Trade (Px/Pa) 67 72 9 108 105 100 99 98 s8 2. Exports of good A NFS 22 41 62 76 79 100 112 116 98 8. Imporsof goods A NFS 89 67 67 71 76 100 1la 117 111 C.1. Domestic absorption 61 68 n 80 87 100 112 119 120 0.1. Total consumption 51 60 72 62 90 100 110 119 122 2. Private 60 57 75 e6 a8 100 110 118 122 8. Genra I govornmnt 51 60 71 81 90 100 109 121 128 E.1. Gross domestic Investmnt 51 75 96 78 80 100 117 118 113 2. Fixed Investment .. .. .. .. .. .. .. .. .. 8. Incraso en stocks .. .. .. .. .. .. .. .. .. Mmorandum Items: F.1. Net factor income from abroad 41 s6 73 82 88 100 11 110 111 2. Net current transfere frm abroad .. . .. . ...... 8. Gross national product 44 59 77 6 87 100 111 118 116 0.1. Gross domestic saving s0 70 es 76 80 100 117 119 181 2. Grose national saving .. . . .. .. N1.. EPO mrchandise trade indices 2. Export prices (px) USI, 1960=100 48 69 100 100 97 89 se 8a 67 8. mport primc (pm) USE, 1990=100 74 865 100 101 97 98 91 90 69 4. Term ot Trade (Px/Po) 66 62 100 106 101 95 96 62 64 *-1 ce rt 0 STANDARD TABLES FORt INDONESIA Balance of Pa ntu Summary at Current Prie s (in ilions of US dollar.) 1976 1979 1980 1981 lip 198 1964 1985 1966 A.1. Exports pt goods NFS (FOB) 11,262 15,464 22,086 28,797 20,261 19,286 21,324 19,871 15,240 2. Merchandise 11,019 15,180 22,762 28,848 19,747 16,689 20,764 16,627 14,896 a. of which: Manufactures 226 488 658 788 856 1,618 2,166 2,441 2,961 8. Non-factor services 288 825 827 449 604 56" 670 644 644 B.1. Imports of goods A NFS (FOB) 10,727 12,126 16,077 21,640 22,716 22,087 19,206 17,640 16,194 2. Merchandise 6,2 9,240 12,599 14,642 17,864 17,726 15,047 12,706 11,986 a. of which: Manufactures 6,452 6,908 9,218 12,674 18,818 12,886 11,888 1,964 10,142 8. Non-factor services 2,845 2,985 8,478 4,998 4,662 4,811 4,239 5,186 4,256 C.1. Resource balance 525 8,828 6,012 2,257 -2486 -2802 2,038 1,651 -964 D 1 Net factor Inome -1961 -2882 -8207 -8078 -2998 -8650 -4061 -8642 -8216 2. Factor receipts Be 8a 120 1,041 1,028 al 26 706 725 a. of which labor income .. .. . .. .. .. .. S. Factor p4yments 2,016 2,405 8,827 4,154 4,016 4,261 4,889 4,310 8,941 a. of which UT Interest (DRS) 720 1,049 1,161 1,431 1,568 1,686 1,908 1,920 2,836 E.1. Net current transfer. (privat.) 0 0 0 0 0 10 53 61 n 2. Trantsfor reclpt. 0 0 0 0 0 10 58 61 71 a. of which workers' remittnces .. .. .. .. .. 10 68 61 71 8. Transter paysnnte .. .. .. .. . . .. . F.1. Current *cct ba1 (cxCI off trans) -1436 94U 2,805 -616 -6468 -0442 -1970 -1950 -4099 0.1. Long-term Capital inflow 1,600 1,849 2,849 2,401 6,280 5,427 8,095 1,907 2,977 W 2. Not direct investment 279 226 160 138 225 292 222 810 268 8. Net official transfers 14 so 201 260 184 104 114 27 95 4. Net LT loans (DRS) S66 669 1,618 2,057 2,710 8,642 2,676 1,264 1,926 a. disbursement. 2,976 2,670 8,248 8,848 4,650 r,66s 4,684 4,890 4,661 b. repaymnts 2,110 2,011 1,628 1,789 1,940 _,028 2,809 8,134 2,938 5. Other LT inflows(n.t) 442 484 860 -89 2,161 1,180 164 814 6" H.1. Other Items (Not) 7.8 -850.2 -2726 -1969 -;625 1,19" -144 558 119 2. Net short-term capital 142 -446 -818 -290 526 781 476 -99 1,295 8. Capital flows n..l. 0 0 0 0 0 C. 0 0 0 4. Errors and omlislons -184 -408 -1907 -1669 -2151 408 -020 651 -1178 1.1. Change In net rerv -171 -1444 -2428 874 1,958 -134 -961 -510 1,003 2. Use of IW credit .. .. .. .. .. 445.1 -31.9 -867 5.2 8. Other res rvo chnge -171 -1444 -2428 874 1,8 5 -629 -949 -148 998 Memorandu Items: J.1. Exports of goods (UN Trade Systm) 11,648 16,690 21,909 22,260 19,747 20,961 20,845 18,711 18,6?7 a. Difference with BOP (S) 0 a 1 -6 0 12 -2 1 -6 2. Imports of Goods (UN Trade System) 9,498 10,864 14,189 16,527 19,996 19,858 16,858 14,280 18,108 a. Difference wth soP (X) 18 12 12 12 12 12 12 12 10 to 01 . ft -I. * n STANDARD TABLES FOR INDONESIA National Account. Summary at Conat.nt 1900 Prics (In billions of notional currency units) 1978 1979 1980 1901 1982 1088 198" 1085 19l8 Origin and Us. of Resource A.1. CDP at market prles 42,689 45,820 48,914 62,516 52,868 54,066 57,328 68,700 01,022 2. Net Indirect taxes 1,880 1,722 1,685 1,870 1,788 1,089 8. GOP at factor cost 40,869 48,698 47,279 50,901 SO,880 52,197 4. Agriculture 10,288 10,967 11,726 12,296 12,420 12,068 18,176 18,785 14,110 5. Industry 18,280 18,948 20,408 21,444 19,704 20,224 21,856 21,982 22,956 a. Manutacturing 4,448 5,7 6,858 0,8a8 0,985 7,142 8,490 9,211 9,708 b. Mining and quarrying 11,480 11,249 11,288 11,422 9,609 9,764 10,887 9,72 10,196 c. Other (by difference) 2,867 2,521 2,818 8,170 8,180 8,819 8,204 8,807 8,405 6. Service, etc. 14,168 16,404 16,768 18,812 20,170 21,191 22,306 22,966 28,964 B.1. Resource balance 6,864 6,807 6,27 13 -1861 -1499 7,649 8,064 5,404 2. Exports of goods A NFS 14,978 15,810 16,162 18,245 12,052 12,622 12,698 11,676 18,856 8. Imports of goods A NFS 6,100 9,009 9,8 18,227 18,418 14,121 11,002 11,802 12,501 C.1. Domestic absorption 86,825 89,018 42,087 52,518 58,724 55,564 56,297 66,160 59,908 D.1. Total consumption, etc 25,058 27,892 80,742 88,851 86,109 87,89 809,68 40,848 42,182 2. Private, etc 21,828 22,909 25,696 25,079 26,900 28,810 80,200 80,986 81,964 a. Statlstical dlscrepancy 0 0 0 0 0 0 0 0 0 8. General government 8,640 4,801 5,148 5,655 0,108 0,049 6,255 6,721 6,920 E.1. Gros domeste lnvestmnt 10,857 11,788 11,895 21,784 20,661 20,706 16,08 20,148 20,60611 2. Fixed Investment .. .. .. .. .. .. .. .. 8. Increooa in stocks .. .. .. .. .. Mmerandum Items: 0.1. Nst factor Income from abroad -1782 -2188 -2011 -1748 -1059 -118# -1809 -1266 -1101 2. Net currnt transfers fr mabroad 0 0 0 0 0 0 0 0 0 8. Gnos national product 40,075 42,871 40,903 61,278 52,586 54,098 57,249 56,761 01,161 H.1. Gross domble tsaving 10,616 18,661 l,171 21,718 16,288 17,887 16,664 16,719 14,890 2. Oross natlonal saving 0 0 0 0 0 0 0 0 0 1.1. Capecity to Import 9,115 11,801 16,182 15,458 1S,689 18,59S 18,576 12,847 10,872 2. Term of trade adjustment -585 -8514 0 2,218 1,96s 975 82 071 -2908 8. Oros domestic incom 86,681 41,806 48,914 64,749 58,950 66,041 56,no 69,2S4 57,602 4. Gross national tnc 85,017 89,867 40,900 58,485 54,178 55,066 58,182 509,72 57,579 _ er a.. Ul I-' .0 STANDARD TABLES FOR INDONESIA Implicit Deflators for National Accounts (In national currency 1900 = 100) ____________________________________________________________________ ______________________________________________________ 1978 1979 1980 1981 1962 198J 1984 1985 1906 Origin and Use of Resour A.1. CP at market prices 66 76 100 111 120 ISO 152 101 I" 2. Net indirect tax* 60 76 100 111 120 136 S. GDP at factor cost 60 70 100 111 120 138 4. Agriculture 6 Be 100 1II 121 140 164 10 177 5. Industry 47 6e 100 112 120 136 149 156 1U3 a. Manufacturing 03 77 100 103 108 11$ 1J0 1S 139 b. Mining and quarrying 37 61 100 110 125 143 155 168 lOg c. Other (by difference) 64 62 100 120 131 164 109 134 1i 6. Services, etc. 01 78 100 11o 11 136 154 1i6 171 8.1. Term of Trade (Px/Pm) 61 77 100 117 118 108 107 106 95 2. Exports of goods o NFS U 66 100 124 127 162 101 106 158 3. Imports ofgoods A NFS St 86 10 100 112 1bO 169 176 167 C.. Domestic absorption 65 82 100 107 116 134 160 169 160 0.1. Total consumption 71 83 100 115 126 140 165 1" 170 2. Private 67 76 100 114 117 184 170 134 100 S. G reneal government 71 85 100 129 141 155 140 162 16 E.1. Gross domstic investment U4 78 100 80 83 105 i28 124 118 2. Fixed invstment 8. Increse In stocks. Memorandum Ites: _________________ F.1. Nat factor Incom from abroad 26 70 100 110 287 g33 8 *14 2. Net current transfors from abroad . 3. Gross national product 65 77 100 110 118 18's 151 0.1. Cross domestic saving AO 84 100 91 96 1:O 158 2. Gross national saving N.1. EPO mrchandise trade Indices 2. Export prices (px) Use, 1990.100 48 69 100 106 9? . . 57 3. Import prices (pm) US1, 1980=100 74 86 100 101 97 a 91 90 3o 4. Term of Trad (Px/P) S 2 100 106 101 96 9S 92 04 …________________________ - ______________----- -_ _ _- __ - -- _- -.- .____-__------------------- 3 II x,, t ' ' wS j ~~~~~~~~~~~~~~~~~~~~~~~~IBRID 11038 1. '\Ti4AI AND r \1 1 S i ) MALAYSIA BRXUNE +.L_,ioc T ' iz \ \ j ~~~~MALAYSIA J -' , S t ,,J,24 > t U";,5>, ,,1IAN KA r (A N-4-)V 2Erro4=X~~~~~~~~~~~~~~~~~~~I D j 5 'L \~>;A WE KFAWAIIAN . j 4c6p22 iu . / 16 ,7 7 -1; ME4 buw zu 2 25sr * '4---4 o...203 ....z p --26iTeArff-ld A.6. IRAN rJAYAE> ~>} }KLO 4wIr12