Press Releases
March 24, 2009
Japanese ODA Loans for Indonesia
-Actively Supporting Economic and Policy Reform-
- 1. Today, JICA President Sadako Ogata signed agreements with the Republic of Indonesia to provide Japanese ODA loans for up to 185,86 million yen for the Development Policy Loan (V) and the Infrastructure Reform Sector Development Program (II)
- 2. The Development Policy Loan (V) is being made with an evaluation of policy reforms made by the Indonesian government since previous development policy loans were made. In particular, improvements to the short-term labor visa application process and intellectual property rights protection, part of investment climate reforms considered especially important to Japanese businesses, are part of the review as are developments in investment and general tax laws. This loan will provide continued support for policy reform in Indonesia as well as promoting policy dialog between Japan and Indonesia. The loans will assist Indonesia by improving the investment climate and fiscal management, fighting official corruption and alleviating poverty. The target areas for reform will be based on discussions with the working group of the Japan-Indonesia strategic investment action plan, initiated by the two governments in June 2005 as a joint project between government and the private sector. Included in the target areas are the enactment of bylaws for intellectual property protection and enhanced capacity of the relevant authorities, and bylaws and streamlines procedures for investment permit procedures and direct overseas investments as proposed by JICA.
- 3. The Infrastructure Reform Sector Development Program (II) is being provided assistance along with evaluation of system reforms made by the Indonesian government to organize its laws and create structures in the areas of infrastructure and investment promotion. This follows a Japanese ODA loan in March 2007 for the Infrastructure Reform Sector Development Program. This loan will contribute to the alleviation of poverty and facilitate infrastructure improvements in Indonesia. JICA supports continued infrastructure policy reform by the Indonesian government in the three areas of promoting infrastructure development, improving the investment climate and improving access to infrastructure. JICA is continuing to support structural and legal reform to enhance the participation of the private sector, the formulation of policies for appropriate fees and subsidies, and the improvement of the land acquisition system. To promote private sector participation in infrastructure projects, JICA supports setting up a framework to distribute the risk of cooperative roadway projects between the private and official sectors funded by technology cooperation. The new JICA also seeks to effectively combine different types of aid implements to promote infrastructure programs that the Indonesian government has prioritized.
- 4. In close partnership with such international organizations as the World Bank and Asian Development Bank, JICA will provide co-financing for the Development Policy Loan (V) and the Infrastructure Reform Sector Development Program (II). JICA will monitor policy reform and its effects as well as hold related policy discussions with the Indonesian government.
- 5. This year marks the final year of Indonesia’s National Medium-Term Development Plan for 2004 to 2009 which was made public in January 2005. A variety of reforms have been carried out such as for alleviating poverty, stabilizing the macroeconomy and improving the investment climate as well as improving fiscal management and promoting infrastructure projects that include private sector participation. The development plan provides economic targets for 2009 such as an economic growth of 7.6 percent compared to 5.1 percent in 2004, an unemployment rate of 5.1 percent compared to 9.9 percent in 2004, and a poverty rate of 8.2 percent, down from 16.6 percent in 2004. These policy reforms carried out by the Indonesian government will be reviewed while these Japanese ODA loans provide the financial assistance required to continue and further promote the reforms. The reforms expected to emerge from this assistance are now even more important to alleviate the effect of the global economic crisis bearing down on Indonesia’s economy and society.
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