A consortium of creditors and donor countries to Indonesia, the CGI was established in 1992 to replace a similar consortium, the Inter-Governmental Group on Indonesia (IGGI). The CGI was a grouping of around 30 bilateral and multilateral creditors, including the World Bank, Asian Development Bank, IMF and the governments of industrial states such as Japan, the USA, UK, which met to evaluate Indonesia's performance and set conditions for economic management, as well as agree loan commitments. (See DTE's IFI factsheets No 19 and No 32 for more background).
Last year, Indonesia secured CGI commitments worth US$5.4 billion in loans and grants. In September, the country's total external debt stood at USD 128 billion (of which 77 billion is owed by the government) - a figure which has been declining slowly from the economic crisis level of USD 151 billion in 1998. Indonesia's debt-to-Gross domestic product (GDP) ratio remained high last year - at an estimated 42 percent last year, although it is predicted to fall this year.
However, tens of millions of Indonesian remain in poverty, while a politically well-connected elite continues to control the bulk of the country's capital. Anti-debt campaigners are calling for Indonesia's illegitimate or 'odious' debt to be cancelled. The International NGO Forum on Indonesian Development (INFID) recently criticised Indonesia's full repayment of its debt to the International Monetary Fund, whose economic prescriptions during the financial crisis, contributed to the huge debt problems. (Jakarta Post 30/Jan/07, www.kau.or.id; www.infid.org; Bank of Indonesia statistics at www.bi.go.id; Antara 15/Jun/07; 25/Jan/07; World Bank statement, 28/Jan/07).
Meanwhile, a study by the United Nations University showed that the richest 2 per cent of people in the world own more than half of all household wealth, while the poorer half of the global population control just 1 per cent. The researchers defined wealth as the value of physical and financial assets less debts. Using data for the year 2000, the study calculated that global household wealth amounted to $125 trillion that year, or roughly $20,500 per person. But the average wealth was much higher in Japan ($181,000) and the United States ($144,000) than it was in India ($1,100) or Indonesia ($1,400), and that differences in wealth were greater than differences in annual income. (http://www.bicusa.org/en/Article.3041.aspx? , http://www.unu.edu/media/archives/2006/files/mre44-06.pdf.)
The three companies are planning to invest Rp34.2 trillion (US$3bn) according to Indonesian Investment Board data for 2006. In addition, Surabaya-based tissue company PT Suparma is investing Rp65 bn in expanding its 15,000 tonne production capacity. A possible 300,000 tonne kraft paper plant in Tanjung Jabung Barat, Jambi is also mentioned. The Department of Industry is reported to have set a 6.8% increase as the target for the paper and printing industry this year.
These proposals fly in the face of a 2005 CIFOR report which recommends that no more forest should be converted to pulpwood plantations (HTI). An analysis of data from five large-scale pulpwood plantations in Sumatra shows that the economic costs are far higher than the economic benefits to the government - by a factor of thirty! On this basis, the conversion of 1.4 million ha of forest in Jambi, Riau and North Sumatra to pulpwood plantations will cost Indonesia US$3bn in total. (Bisnis Indonesia 15/Jan/07; www.cifor.cgiar.org/publications/pdf_files/WPapers/WP30Maturana.pdf)