SUGIHARTO Minister of State Owned Enterprises	EMIL SALIM Emil Salim, Co-Chairman of USINDO

President Susilo Bambang Yudhoyono appoints new economic team to bring about long-term stability

ew Southeast Asian economies have proved more resilient over the past few years than Indonesia’s. Although the world’s largest archipelagic state has bounced back to average around 6 percent GDP growth per year since the 1997 Asian financial crisis and the devastating tsunami of December 2004, several hurdles to economic development remain as the nation continues its transition to popularly elected governments after four decades of authoritarianism.

As soon as President Susilo Bambang Yudhoyono took office on October 20, 2004, he announced an ambitious growth plan and appointed a strong group of economic ministers who designed a medium-term plan focusing on four broad objectives: creating a safe and peaceful Indonesia, creating a just and democratic Indonesia, creating a prosperous Indonesia, and establishing a stable macroeconomic framework for development.

The president has shown a clear vision by targeting an oil production increase to 1.3 million barrels per day by 2009. Currently, declining output and soaring demand have turned Indonesia into a net oil importer, threatening its membership in the Organization of Petroleum Exporting Countries.

The government plays a significant role in the nation’s market-based economy, administering prices on basic goods and running more than 150 state-owned enterprises (SOE’s) that make sure basic goods and services reach the nation's 242 million people. More than 6,000 of Indonesia's 17,500 islands are inhabited, and in total cover an area some three times the size of Texas.

The Minister of State Owned Enterprises, Mr. Sugiharto, says that he likes to look at Indonesia as a big corporation and believes that a strong balance of payments will go a long way to securing economic stability.

“My objective is to make state-owned enterprises the captains of industry that lead and focus on resource-based industries rather than relying too much on the non-strategic and non-resource-based industries,” Mr. Sugiharto explains. “With that I expect to create value from the resource based business, midstream business and downstream distribution. Indonesia has a very good market base because we are the fourth most populous country in the world.”

The co-chairman of the non-profit organization USINDO (United States-Indonesia Society), Emil Salim, says a good first step would be to decentralize U.S. investment in Indonesia, 80 percent of which is focused on oil and gas.

“We have tropical terrestrial resources and tropical marine resources, which are the largest in the world after Brazil. But we need U.S. technology to exploit those resources to position Indonesia as a sector specialist,” Mr. Salim says. “We cannot at the moment compete in other sectors with China, Japan or other countries. We need investment but investment that is suitable for the twenty-first century.”