RI's self-reliance key to economy

The Jakarta Post ,  Bogor, Wed, 11/05/2008

Indonesia must look to its own natural resources to develop a self-reliant economy to resist fallout from the global credit crunch, President Susilo Bambang Yudhoyono has said.

"I don't believe in the trickle down effect theory," Yudhoyono said in his speech that marked the 45th anniversary of the Bogor Institute of Agriculture (IPB).

The President was referring a rhetoric employed during the New Order regime that placed an emphasis on supporting businesses with the theory their productivity would eventually benefit the greater population.

His statement came against the backdrop of a descending global recession that his government has been working to resist.

Yudhoyono, who obtained a doctorate degree in economics from IPB before he was elected president in 2004, called for actions to strengthen the domestic economy against the global crisis.

Indonesia, he said, should gradually develop its economy based on its national resources because "a crisis could strike at anytime, due to unstable and insecure global financial structure."

He said the global economic system was unfair and did not warrant prosperity for all, and that it therefore needed overhauling.

"To develop a self-reliant economy, we should strengthen domestic funding instead of depending on overseas financial support," Yudhoyono said.

In 2003, Indonesia officially quit the extended fund facility program under the International Monetary Fund (IMF), which was among Indonesia's biggest lenders in the wake of the Asia financial crisis of the late 1990s.

The country's foreign debt currently stands at US$67 billion.

"We have managed to gradually decrease the ratio of debt to GDP from 70 percent several years ago to 32 percent at present," Yudhoyono said of his administration's economic performance.

The President said the country should make the most of its abundant natural resources to empower its economy.

"An export-oriented economy is not an option we should take. Exports are indeed necessary to stimulate growth, but we should not rely on exports because we will be severely affected should the global market become turbulent," he said.

Indonesia should develop a sustainable, natural-resources-oriented economy that engenders culture and knowledge, he said.

"We opt to maintain growth and equality at the same time," he said.

He said the root causes of the ongoing global crisis were an imbalance between supply and demand and unregulated market speculation.

He also blamed the IMF and the World Bank for not doing enough to address the issue.

"We should analyze the roles of the IMF, the World Bank, and the WTO over whether they will be able to provide solutions or whether they are merely being used by economic powers," he said.

He said one of his dreams was to see the country independent in crucial sectors, including food, energy and defense.