http://english.aljazeera.net/NR/exeres/165AD6A9-F931-4422-B2EF-1E1F760F5F94.htm
Drive to create jobs in Indonesia
Friday 08 September 2006, 17:37 Makka Time, 14:37 GMT
The Indonesian economy has been hard hit by the tsunami
The Indonesian government has set up a $1 billion loan scheme for small
plantation holders which it hopes will lift people out of poverty and
unemployment.
Bayu Krisnamurthi, deputy minister at the chief economics ministry told Reuters
in an interview: "One of Indonesia's biggest challenges is poverty which is
related to unemployment. We face fiscal constraints, while (economic) growth is
not big enough to cope with unemployment. So there must be a direct approach."
It is hoped that the scheme will help to lift people out of poverty by creating
jobs in the agriculture sector, where the biggest exports are palm oil, cocoa,
and rubber.
The remarks from Krisnamurthi came as the government announced that the number
of people living below the poverty line in March had risen 11 per cent from
February last year.
Poverty has often been blamed for religious radicalism and fragile social
stability in the country of 220 million people, where two thirds of the poor
live in rural areas, including near plantations.
The scheme
Poverty has often been blamed for
religious radicalism in Indonesia
Under the loans scheme, commercial banks can extend 10 trillion rupiah ($1.10
billion) in total at subsidised interest rates to plantations in the next four
years.
Indonesia, the world second-biggest producer of rubber and palm oil and
third-biggest for cocoa, said the loans carried fixed rates of 10%.
With commercial lending rates at up to around 16 per cent, the government
covers the difference.
PT Bank Rakyat Indonesia, the country's leading bank in rural areas, is
expected to play a major role in the subsidised loan scheme which has so far
received a healthy response from the plantation sector, Krisnamurthi said.
Official data indicates that about half of Indonesia's 100 million labour force
is employed in the agriculture sector.
Momentum
"We have to capitalise on the momentum not just to resolve problems faced
by the plantation sector, but also to fix the bigger economic problems so as to
create employment opportunities"
Bayu Krisnamurthi, deputy minister at the chief economics ministry
Krisnamurthi said he was optimistic that the scheme would work as palm oil
prices were expected to stay firm amid strong global demand for biofuel, while
rubber prices were being boosted by high demand from the fast-growing economies
of China and India.
"We have to capitalise on the momentum not just to resolve problems faced by
the plantation sector, but also to fix the bigger economic problems so as to
create employment opportunities," Krisnamurthi said.
Indonesia's unemployment is around 11 per cent, one of Asia's highest rates.
Latest government data showed that the number of people living below the
poverty line in Indonesia was 39 million in March, about 18 per cent of the
popluation.
The number rose compared with February 2005 as prices of fuel and rice rose.
It set the poverty line at 152,847 rupiah ($16.8) a head per month, or about 56
US cents a day. Based on the more frequently used poverty line of $1 a day, the
number of the poor would be much higher.
Reuters
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