There is broad international consensus that economic growth is also good for the poor. The experience in Indonesia is evident: poverty has reduced significantly thanks to the economic recovery after the 1997/98 financial and economic crisis. To actually reduce unemployment in Indonesia, it has been calculated that the economy must grow at least 6% annually and preferably more. In other words high economic growth rates are a pre-condition for alleviating poverty in Indonesia. A lot of emphasis is therefore put on creating the right conditions for economic growth such as macro-economic stability and a favourable investment climate.

Good governance, a social, transparent and accountable division of national income are equally essential for achieving pro-poor growth. Private sector companies are expected to behave in a responsible way observing internal standards. To stimulate corporate social responsibility the Indonesia Netherlands Association undertakes workshops and has issued brochures for the wood, food and textile sectors.

The private sector is considered as the engine for growth, to help increase national income and pursue sustainable development. In this respect the Netherlands policy concerning private sector and poverty alleviation is focussing on three parallel tracks:

• at the global level: improving the international economic climate and helping to create level playing fields (trade-liberalisation i.e. lifting of trade-barriers, stimulating foreign direct investment, sustainable debt-servicing and advocating policy coherence);
• contributing to a better investment climate in Indonesia through a clear and transparent framework for doing business, macro-economic- and political stability, stimulation of market-principles, development of social and physical infrastructure and advocating social values and environmental protection;
• addressing specific needs through the promotion of trade and investments, transfer of knowledge and technology, provision of technical assistance to SME's, promotion of investments in physical infrastructure with an emphasis in water and sanitation, rural energy and improving access to education.

The Netherlands support the Government of Indonesia in their efforts to improve the investment climate, to improve budgetary management, to exploit international trade opportunities and help fight corruption. Most of this assistance is provided through a Trust Fund managed by the World Bank in Jakarta. 

Public private partnerships are a new way of collaboration between the public and private sector. In Indonesia PPP's have been established in the field of horticulture (with Cordaid and Agriterra), palm oil and shrimps (with the Netherlands Ministry of Agriculture). 

In addition the Netherlands has several bilateral policy instruments that are operational in Indonesia:

PSOM

A successful program aimed at stimulating joint investments by Dutch and Indonesian companies in small scale innovative enterprises in Indonesia, thus, besides introducing knowledge and capital, facilitating access to international markets and generating jobs. Currently sixteen such projects are being implemented in Indonesia. For further information on application procedures, eligibility criteria and examples of ongoing projects in Indonesia, please consult the EVD website  www.evd.nl/psom

ORET

The programme for Development Related Export Transactions (ORET) provides grants to cover part of transaction costs for the purchase of capital goods, services or works from the Netherlands. ORET is designed to help improve economic and social infrastructure, thus generating employment, boost trade and industrial development in developing countries and promote environmental protection. The grants are awarded for commercially non-viable projects that are in line with the Netherlands development policy, contribute to economic relations with the Netherlands and do not harm or have a positive impact on the environment. The programme is implemented by PriceWaterhouseCoopers and Ecorys Nederland. It will soon be adjusted to the new policy lines of the present cabinet. For the most actual information, please visit:  www.oret.nl.

PUM

The PUM programme provides Dutch short-term senior management advice to SME companies. In 2005 some 100 missions were carried out in Indonesia alone. For further information on PUM activities in Indonesia and the nearest PUM local representative in your region, please look at  www.pum.nl.

PBSI

The Bilateral Cooperation with Indonesia Programme (PBSI) supports bilateral cooperation between Dutch non-government organisations, educational institutions, local authorities and the semi-public sector and their Indonesian counterparts that are not eligible for other grant schemes. Eligible activities should be complementary to the programmes implemented through multilateral channels under the Netherlands Development Cooperation programme.