VZCZCXRO3523
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #1570/01 2320132
ZNR UUUUU ZZH
O 190132Z AUG 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9825
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
RUEHBJ/AMEMBASSY BEIJING 5308
RUEHBY/AMEMBASSY CANBERRA 2914
RUEHLM/AMEMBASSY COLOMBO 1207
RUEHKA/AMEMBASSY DHAKA 1178
RUEHNE/AMEMBASSY NEW DELHI 2120
RUEHPB/AMEMBASSY PORT MORESBY 3925
RUEHUL/AMEMBASSY SEOUL 4823
RUEHKO/AMEMBASSY TOKYO 2376
RUEHWL/AMEMBASSY WELLINGTON 2960
RUEHHK/AMCONSUL HONG KONG 2889
RUEHPT/AMCONSUL PERTH 1050
RHEHNSC/NSC WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 001570 
 
SIPDIS 
 
DEPT FOR EAP, EAP/MTS, EAP/MLS, INR/EAP 
NSC E. PHU 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ID
SUBJECT: PRESIDENT'S ANNUAL NATIONAL DAY ADDRESS FOCUSES ON 
EDUCATION, POVERTY ALLEVIATION 
 
REF: JAKARTA 1555 AND PREVIOUS 
 
JAKARTA 00001570  001.2 OF 002 
 
 
¶1.  (U) SUMMARY:  President Yudhoyono delivered his annual 
National Day speech on August 15.  The speech was given in 
Parliament and the Ambassador attended.  Before the 
President's speech, the Speaker--an influential figure in his 
own right--addressed the gathering, underscoring his support 
for more education spending. 
 
¶2.  (U) SUMMARY (Con'd):  Yudhoyono pledged to increase 
education spending in order to reach the constitutionally 
mandated 20% of the total budget.  He highlighted the results 
of his economic development strategy and outlined efforts to 
alleviate poverty through improvement of basic services and 
rural development, and accelerating economic growth through 
infrastructure.  He also mentioned agriculture and energy 
development, and said he would intensify his anti-corruption 
drive and bureaucratic reform efforts in order to solidify 
democracy, defense and domestic security.  The speech was an 
important one for the President as he gears up for his 
re-election effort next year, but it did not break new 
ground.  END SUMMARY 
 
SPEAKER'S REMARKS 
 
¶3.  (U) Speaker of the House Agung Laksono gave opening 
remarks pledging support to the President's commitment to 
reach the 20% of the State Budget requirement for education 
as mandated by the Indonesian Constitution.  That said, he 
was critical of SBY's energy policy with regard to shifting 
working hours in the manufacturing industry to the weekend in 
order to alleviate the electric power crisis, calling it 
ineffective and a deterrent to investment. 
 
¶4.  (U) The Speaker touched on foreign affairs, mentioning a 
recent letter sent by some 40 members of the U.S. Congress 
calling for the release of two Papuans charged with sedition 
for raising a separatist-linked flag.  Laksono said the 
Indonesian Constitution provides for basic protection of 
human rights and "we do not wish to have excessive 
intervention by foreign parties in Indonesia's internal 
affairs, which would belittle Indonesia as a sovereign and 
democratic state." 
 
SBY HIGHLIGHTS HIS EFFORTS 
 
¶5.  (U) Taking the stage, the President highlighted the 
results of his government's "growth with equity" economic 
development strategy and the tripling of poverty alleviation 
program budgets over the past four years.  He pointed to a 
rapid decline in unemployment (from 10.5% in February 2006 to 
8.5 percent in February 2008) and to reduced poverty levels 
(from 17.7% in 2006 to 15.4% in March 2008, a ten-year low). 
 
KEY POINTS 
 
¶6.  (U) The speech also focused on education, poverty 
alleviation, subsidies, infrastructure investment, and 
corruption eradication.  Key details included the following: 
 
--Education remains the top priority and will receive the 
greatest percentage of the 2009 budget (20%) in order to 
raise the quality of education and make Indonesia more 
competitive in the 21st century.  This development was 
prompted by an August 13, 2008, Constitutional Court 
decision, which ruled that the 2008 state budget violated the 
Constitutional requirement that at least 20% of central and 
regional government budgets be directed to education.  SBY 
acknowledged the difficulty of carrying out this extra 
spending, given extremely tight budget constraints.  Because 
of this, the budget deficit would increase to Rp. 99.6 
trillion, or 1.9% of GDP.  (Note:  Key 2009 budget 
assumptions include growth of 6.2%, inflation of 6.5%, and an 
 
JAKARTA 00001570  002.2 OF 002 
 
 
exchange rate of Rupiah 9100:1USD.) 
 
--Improving Basic Services in the health, education and rural 
development sectors receive Rp. 142.8 trillion.  The  poverty 
alleviation program receives a budget allocation of Rp. 66.2 
trillion, with rural development receiving Rp. 17 trillion. 
It's four main targets are: lowering the poverty level to 
12%-14%, raising basic education, extending free health 
services to the poor, and widening the accessibility of 
affordable transportation services. 
 
--Subsidies remain a significant portion of the budget and 
are projected to total 27.8% of the budget.  This rate could 
rise if world oil prices exceed the $100/barrel budgetary 
assumption.  Subsidies are to be allocated as follows:  fuel 
- Rp. 101.4 trillion, electricity - Rp. 60.4 trillion; and 
food, fertilizer and seedlings - Rp. 32 trillion. 
Acknowledging that energy subsidies disproportionately 
benefit those who own cars and high wattage houses, SBY said 
the GOI will continue to amend its subsidy policy, based on 
developments in global oil prices, in order to reduce budget 
leakage and prevent misdirection of budgetary resources. 
 
--Infrastructure funding, which had increased from Rp. 21.9 
trillion in 2005 to Rp. 58 trillion in 2008, would receive 
Rp. 39.5 trillion. 
 
--Eradicating corruption through bureaucratic reform remains 
high on SBY's priorities.  He will allocate Rp. 16.7 trillion 
to the 2009 general elections to ensure they are conducted in 
a fair, impartial and peaceful fashion. 
 
--National defense remained a priority in the budget. 
 
¶7.  (U) Mission will provide the text of the speech to 
EAP/MTS. 
 
HUME