Regions and Countries

	Table of Contents
p. 12 of 33 BACK | NEXT I. Current Development Trends and Issues II. The Government's Development Strategy A. Development Goals and Strategy B. Resource Mobilization and Investment C. Role of External Assistance D. ADB’s Assessment of the Government’s Development Strategy III. ADB's Development Experience IV. ADB's Strategy V. ADB's Assistance Program VI. Risks and Performance Monitoring and Evaluation

Country Strategy and Program 2006-2009 (Draft for Consultation): Indonesia : II. The Government's Development Strategy

---

A. Development Goals and Strategy

40. In September 2003, the Government prepared a White Paper which included broad ranging structural reforms both at macroeconomic and sector level. Taking forward the White Paper agenda, the current Government has formulated the Medium Term Development Plan (RPJM),²¹ which broadens and deepens structural reforms across the board. The vision of the Government is to (i) create an Indonesia that is safe and peaceful, (ii) establish justice and democracy for all citizens, and (iii) advance the welfare of the people. This is the basis for RPJM for 2006-2010, for which the Government prepares annual work plans (RKP). To increase the welfare of the citizens, the Government aims at higher growth rates and the type of growth that would ensure job creation as well as environmental sustainability, complemented by an acceleration of actions and investments to achieve the Millennium Development Goals (MDGs). It has identified five key priority areas to achieve its goals: (i) job creation and poverty reduction programs; (ii) maintaining macro-economic stability through stable prices, fiscal sustainability and financial sector reforms; (iii) accelerating investments, exports, and tourism through reforms to create a healthy business climate and flexible markets; (iv) improving access to and quality of education and health; and (v) infrastructure development through improving the efficiency of existing services and encouraging greater private sector participation.

41. The macroeconomic targets in the RPJM include an average economic growth rate of 6%-7%, with open unemployment declining to 5.1%, down from 9.7%. The RPJM targets to halve the percentage of people living below the poverty line to 8.2% by 2009, including programs to improve food security, water supply and sanitation, access to basic health and education services, and shelter. In the education sector, the plan projects an increase in enrolment rates, especially in the nine years mandatory basic education program, reaching over 99% in 2009, and an improvement in the quality of education. The plan also projects a significant increase in enrollment in secondary and tertiary education, with an accompanying reduction in illiteracy rates to 5%. In the health sector, the targets include an increase in life expectancy to 70.6 years, up from 66.2, an infant mortality rate of 26 per 100,000 live births, down from 35, a maternal mortality rate of 226 per 100,000 live births, down from 307, and a reduced prevalence of malnutrition among children under five to 20%, down from 26%.

42. The Government’s anticorruption campaign has shown results in the form of a number of high profile arrests. The administration also declared 55 governors, regents and mayors as suspects in corruption cases. The anticorruption commission (KPK) has investigated numerous corruption cases, leading to the arrest of civil servants at all levels. This has resulted in a marked slow down in decision making in the Government, as well as issuing approvals and licenses to the private sector and issuing contract awards. At the institutional level, a comprehensive reform program in various institutions such as tax, immigration, and customs offices was started. A recent Ministry of Finance restructuring included the creation of a Fiscal Policy Office, and a Debt Management Office, to continue the strengthening of public financial management. The ongoing strengthening of the public audit sector, and strengthening financial management at the local government level should also be viewed in this light.

Back II. The Government's Development Strategy	Next B. Resource Mobilization and Investment