With methods available to develop policy targets and the means to determine trade offs, policy 

makers are able to outline policy reform programs to meet established targets.  The sustainable 

development portfolio has now grown.  It includes improved industrialization policies based on 

export growth and setting indicators for environmental and natural resources parameters.  

Decentralizing economic resources management decision making is recommended to locate 

decision making power at a level closer to where impacts of decisions are felt.  Decentralization 

is one means by which values outside the dominant market allocation systems can be 

incorporated. 

Modifying the patterns of Indonesia s natural resources use will require fundamental changes to 

the pattern and scale of incentives provided for economic growth.  Existing and prospective 

users need incentives to use resources in the least wasteful manner by incorporating higher 

levels of labor and man made capital with natural resources.  Public policy must provide clearer 

incentives to increase the degree of value added processing and for improving resources use 

recovery rates.  Provision of clearer incentives will necessitate removal of existing disincentives 

created as part of previous trade policies, such as the cascading levels of protection presented 

earlier. 

Although the GOI has made considerable progress in reducing the nominal rates of protection, 

considerable cascading still exists (NRMP Report No. 55).  Furthermore, this "has clear 

negative implications for efficiency of natural resources use, employment, output, income, 

export earning, economic growth and ultimately the sustainability of the economic development 

path".  The widely held perspective that protecting domestic producers of manufactured goods 

derived from natural resources is consistent with sustainable resources management is not in 

fact the case.  While this policy reduces demand for resources in the protected sectors, it 

increases pressure on the raw material sectors to provide required export earnings.  With 

removal of protection on manufactured goods, the same export earnings could be achieved at 

less cost to natural resources.  In short, deregulation offers a  win win  outcome for natural 

resources management. 

The pathway through which sustainable management of resources will be achieved requires 

greater attention, including the provision of a plan for sustainable growth to enable effective 

implementation.  Both sustainable resources management and sustained, long term economic 

growth will require improved integration of both planning and trade policy.  While assisting the 

goals of economic growth, recent deregulation policies have not been sufficiently well developed 

to provide the desired integration.  Without improved integration between policy and planning, 

the likelihood of achieving goals set by the present GBNH national planning guidelines are very 

slim.  A sustainable development portfolio will require that planning and policy be closely 

integrated and mutually supportive. 

The policy implications of trade reform are direct and obvious.  Trade policy needs to reduce 

distortions in the natural resources intensive sectors and provide equal encouragement for 

diversifying the country s exports away from dominance on a few commodities.  In addition, 

there should be no further sectoral interventionist policies.  Sectoral interventions simply add 

distortions at another level.  Not only should tariff barriers be reduced or revoked, so should the 

myriad of sectoral non tariff barriers that purposefully distort the relative price ratios faced by 

producers. Currently, Indonesia is forfeiting many potential benefits due to such price distortions 

further deregulation to reduce the level and cascading nature of tariffs is again a potential  win 

win  option that would increase the likelihood of achieving economic development goals.  

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