Indonesia

Indonesia's recovery was already slowing several months before the events of September 11. Political instability had raised social tensions and slowed reforms--fueling... Show More + capital flight, alarming investors, and delaying official external finance for development. Progress on bank restructuring had slowed and the debt of financially strapped corporations remained largely unresolved. Corruption flourished, unchecked by a justice system that itself was corroded. Regional tensions increased even as the country embarked upon an ambitious decentralization program. And, if real wages are any indication, progress on poverty reduction--encouraging in 1999 and 2000-ground to a halt. Although markets initially welcomed President Megawati Soekarnoputri into office, the new administration has made little progress on structural and governnance reforms in her first one hundred days in office, thus renewing nervousness in markets and worrying external donors and creditors. The events of September 11 have emphatically underscored the urgency of Indonesia's reform priorities. but donors need to be realistic about what is feasible, given strong vested interests, severe institutional weaknesses, the uncertainties arising from decentralization, and a turbulent transition to democracy. Progress is most needed in the key areas of structural reforms, good governance, and empowering and investing in the poor. Show Less -

The objective of the report is to point at the need for a new poverty strategy, and the areas of action it should cover, where each area should be specifically discussed,... Show More + addressing the lives of Indonesia's poor, and the tradeoffs policymakers will need to consider, based on the belief that this poverty strategy should emerge from a broad dialogue among stakeholders. First, in broadening poverty, the report looks at the facts of the late 1990s crisis, which revealed the precariousness of Indonesia's gains in reducing expenditure-based poverty. Thus to extend those gains, the poverty strategy needs to be defined, and then redeveloped by acknowledging the multidimensional reality of poverty, and, it is this notion which will lead to making the strategic choices. Second, within the country's political transition to a democratic, decentralized mode of governance, a poverty strategy needs to be consistent with an empowered populace, and democratic policymaking mechanisms. In creating a policy environment for raising the incomes of the poor, the report identifies the resumption of rapid sustainable growth, with rising real wages, employment opportunities, and, limited inflation, including the economic empowerment of the poor, enhanced by poverty-focused public expenditures. Inevitably, the provision of core public services is an area which should address the people's will in local governance policies, focusing on education and health, while providing appropriate infrastructure, and developing safety nets. Show Less -

The study reviews the strategy for a prospective health development, and the health benefits associated with decentralization, in a likely challenging near to medium... Show More + term period in Indonesia. It addresses the major government reorganization, expected to take effect in January 2001, which could well define the social process during the next decade, consisting of decentralization of spending authority, enhanced access to resources at local government levels, and civil service reform. The potential health system benefits, associated with decentralization, will enable citizens to become involved systematically in decisions regarding health policy, design, and financing, as well as influencing service provision. The report describes the health system performance, and costs in the country, namely an adaptation of health for all, aimed at a wide coverage, featuring integrated service provision at the primary health level. However, mixed results proved great imbalances, for low income families lagged behind other quintiles in terms of infant mortality rates, prevalence of specific diseases, and nutrition problems, while households in the top expenditure distribution, proved high uses of public facilities, compared to the bottom expenditure distribution. The pre-crisis policy is examined, i.e., the impacts on the provider-client equation; and, policy options offer opportunities through decentralization, reform related issues, and effective partnerships with non-governmental organizations, and donors. Show Less -

This study attempts to provide a broad, first cut review of the most pressing issues facing the sector, and to recommend ways to ameliorate or eliminate the problems.... Show More + The main problems are: 1) petroleum product prices are heavily subsidized at the aggregate level and distorted at relative levels, and thus need to be rationalized within an economic framework; 2) the functions and role of the state oil and gas company (Pertamina) are problematic, and therefore Pertamina must be fundamentally restructured to eliminate the conflicts of interest and inefficiencies; 3) some of the provisions of the production sharing contracts are relatively regressive and need to be re-evaluated with a view to maximize the contribution of the sector to the economy, and to increase upstream investment by the private sector; 4) existing laws and regulations are inadequate and must be replaced; 5) petroleum products are of poor quality and must be improved, particularly by phasing out the lead from gasoline; and 6) energy sector institutions are weak and must be strengthened. Although the issues are complex and sweeping changes are needed, given the current political climate, this is an opportune time for Indonesia to begin the process. As a first step, preparing an official and comprehensive declaration of government policy for the hydrocarbon sector is critically important--needed are the vision for the sector, policy objectives, and policy actions required to solve the sector's problems. Show Less -

This report looks at key strategic issues, including tradeoffs and choices, that Indonesia will face in the future. The report distinguishes between short-term strategies... Show More + for the next two-to-three years of economic hardship and medium-to long-term strategies for the next ten to fifteen years. The main messages emerging from the report for the government during the crisis and post-crisis periods are as follows: 1) Sustain investments in basic education and protect the poor from the damaging effects of the crisis. 2) Enhance the quality of education significantly. 3) Consider various options to ensure that the expansion is affordable, that it reaches the poor, and that it does not replicate existing inefficiencies. In addition, reduce the dropout rate at the primary level. 4) Continue decentralizing to lower levels of government and to schools, but redefine and clearly assign responsibilities. Introduce new incentives and funding mechanisms that balance autonomy with accountability to government and the community. 5) Continue the strategy of restricting expansion of public post-basic education while relying on the private sector to respond to demand. The government should also contain costs in public vocational and technical schools, emphasize general secondary education over vocational education, and improve efficiency in public universities. Show Less -

This report is part of a long-term process of capacity building and mainstreaming of poverty analysis in Bangladesh. Chapter 1 outlines the collaborative, capacity-building... Show More + effort between the Bureau of Statistics (BBS) and the World Bank to access primary data needed to profile poverty and elucidate the determinants of poverty; presents new measures of national, rural, and urban poverty since 1983, based on household expenditure surveys; measures poverty based on location, land ownership, and the education, gender, and occupation of the head of household; and compares Bangladesh's performance with that of other South and East Asian countries. Chapter 2 discusses the relationship among growth, inequality, and poverty to address why poverty has declined so slowly. Chapter 3 examines microeconomic determinants of poverty related to education, occupational choice, land ownership, geographical location, labor markets, and demographics. It discusses the role of investments, especially in social and human capital, and microfinance programs. Chapter 4 focuses on government expenditures and social safety net programs, urging the need to improve quality of basic health care and both quality in and access to education, especially for girls. Chapter 5 reviews the growth of nongovernemntal organizations and assesses their performance relative to that of the government in providing microcredit, health, and education services in rural areas and in targeting the poor. Show Less -

This Road Sector Study for Indonesia examines the new challenges facing the road sector and, in particular, assesses the funding requirements to meet the demands for... Show More + additional road capacity, and compares these with current funding levels. It also reviews the government's transport policies in general to identify ways to better meet the challenges. Finally, it develops recommendations for a comprehensive strategy to meet the challenges. The study, largely based on data and information routinely produced by the Directorate General of Highways (DGH), presents the following findings and recommendations: 1) There is a growing backlog of capacity expansion investment; to deal with this, the overall funding for level road works in the current and the next five-year plan would have to increase. 2) However, funding should not be increased immediately to higher levels because there is no pipeline of well-prepared capacity expansion projects; institutional capacities to implement a larger program are insufficient; and greater efficiency can be obtained from current funding levels. 3) To meet transport demands, Indonesia should focus on building up a pipeline of sound capacity expansion investments and achieving better results from current funding levels. 4) This should be complemented by improved sector policies and measures on road use and private sector participation, which, over time, will moderate the rate of growth of demand for road transport and the call on public funds. Show Less -

Indonesia is one of the highest performing Asian economies. Per capita GDP growth was in the top 10 percent of all developing countries during the last 30 years; poverty... Show More + reduction was equally notable. According to the World Bank, Indonesia moved from low to lower middle-income country status in 1993. It has a well-deserved reputation for strong macroeconomic management. Its economic growth has raised average incomes in all parts of Indonesia over the past 30 years. The basis of that growth can underpin continued modernization of the country. It also is the surest path toward continued progress in reducing poverty. But continued growth will exacerbate strains that have begun to emerge, unless policy measures are taken. Such strains are appearing in the use of land, water and forestry resources; in the growing pollution problem; in the deregulation process; in financial sector problems; and in the privatization process. Greater transparency and greater reliance on market forces would relieve these strains. Indonesia's economic growth and structural transformation have been facilitated by a well-functioning labor market. The share of workers has shifted dramatically from agriculture to the rapidly growing industry and service sectors. Also, across all provinces of the country, income and consumption grew, social welfare indicators improved, and there was continued progress in reducing poverty during 1983-1993. This report examines four dimensions of Indonesia's economic performance and the challenges they hold for modernizing Indonesia: 1) maintaining macroeconomic stability; 2) increasing transparency and competition in the economy (natural resources, environmental pollution, deregulation, the financial sector and private provision of infrastructure); 3) maintaining a well-functioning labor market; and 4) sustaining equitable, broad-based regional development. Show Less -

This report assesses Indonesia's approach to health work force development and deployment, and identifies manpower related challenges likely to stand out in the mid... Show More + to late 1990s and beyond. The Government of Indonesia's wide-ranging health work force initiatives have been a policy response to the large derived demand for staff projected as a consequence of an expanding network of publicly run service points. At the heart of this delivery system is the health center (puskesmas) which provides curative outpatient care and undertakes preventive health activities in services areas of roughly 30,000 people. The puskesmas, which directs those requiring inpatient treatment to district-level referral hospitals, is responsible in turn for operating village-level sub-centers, which offer limited curative and preventive services. The health workforce has grown rapidly since 1974 when there were fewer than 50,000 health workers to the present where there are approximately 178,000 individuals employed in health related jobs. Issues of training, staffing demand, educational levels and facilities, as well as the cost of maintaining a large and effective health work force have prompted this review of the work force and Indonesia's policies regarding health care delivery. Show Less -

Issues of "sustainable development" have become increasingly important for Indonesia over the last decade. While the Government's past development efforts have been... Show More + remarkably successful in stimulating growth and reducing widespread poverty, the pace and pattern of development have led to growing concern about the sustainable use of natural resources (land, forests, water and energy) and the social and economic costs of urban and industrial pollution. The report explores these issues, assesses their implications for the achievement of Indonesia's long-run development objectives, and suggests an action plan for the near and medium term that will help to ensure that these objectives are met. Show Less -