JAKARTA - ASK banker Dondi Hananto what the most important task for Indonesia's new government is and he immediately replies: infrastructure development.

'Despite our wealth of natural resources, there are parts of the country that are really lacking. It's just simple things like how the mobile phone signal goes weak an hour away from big cities and how roads are nothing but dirt tracks outside the towns,' says the 32-year-old.

Mr Dondi's comments echo those of his fellow citizens, who cheer the political reform that has taken place in the last decade since the fall of Suharto's authoritarian regime in 1998, but want to see more of Indonesia's pressing problems fixed. They are satisfied with economic growth of between 5 per cent and 6 per cent in the last few years but analysts interviewed by The Straits Times say it is time for progress to trickle down to all levels of society to tackle the widening income gap. To reduce poverty, more people will need stable jobs, they say.

Mr Bambang Susantono, a deputy to the Coordinating Minister for the Economy, told The Straits Times that the government's plan for infrastructure is to also focus on railways and sea transport in 'the next three to five years', so as to reduce the burden on roads.

Analysts suggest that farmers be given more education and training to raise their output. Experts also recommend boosting job growth by diversifying Indonesia's manufacturing industries, instead of sticking with the current system where resources are extracted and then sold. The current system has kept wealth in the hands of a few companies.

Bank Danamon economist Helmi Arman said the manufacturing sector is labour-intensive and can be the source of many new jobs. 'Since early 2000, growth in this (manufacturing) sector hasn't been high enough - on average about 5 per cent annually - while in the years prior to 1998, the growth could reach a double-digit number,' he said.

To encourage more firms to set up shop, analysts and businessmen say a rigid labour law - which compels companies to pay at least one month's severance pay for every year an employee has worked if he is retrenched - must go.

Chairman of the Indonesian Chamber of Commerce and Industry M.S Hidayat said that this is why employers have opted to outsource jobs and hire contract workers, creating a labour force where most employees have no medical benefits or pensions.

President Susilo Bambang Yudhoyono's apparent solid showing in the election on Wednesday has given him a 'strong mandate' to push through with reforms, according to the International Monetary Fund (IMF).

Indonesia's economic growth may exceed 6 per cent in Dr Yudhoyono's second term, Mr Milan Zavadjil, head of the IMF's Indonesia office, told Bloomberg on Wednesday. The IMF forecasts that South-east Asia's biggest economy will expand as much as 4 per cent this year, the fastest pace in Asia after China and India.

Read the full story in Thursday's edition of The Straits Times

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