Colombo Plan and Indonesia2
With reference to your telegram No. 103, the following general information is submitted as a guide to the Department in its consideration of possible ways of giving Indonesia early assistance under the Colombo Plan. This memorandum is based on discussions which we have had in the last ten days with Commonwealth colleagues, Indonesian officials and members of the United Nation Technical Assistance team in Djakarta.
2. In the case of the Indonesians 1 have, in the absence of instructions from Canberra as to possible Australian aid, so far confined myself to talking very informally in the most general terms. I have naturally avoided at this stage giving the impression that any particular type of aid might be expected. It is clear that the Indonesians for their part have not yet given any serious thought to the question of entering into detailed discussions with Colombo Plan donors. At present they are occupied with a number of primary internal political issues (e.g. the crisis in the army, the budget, the elections), and it will probably be some time before the Government gets round to any thorough going consideration of the Colombo Plan in all its aspects. In these circumstances I think any offers of practical assistance from Australia would be useful: if we were to wait for the Indonesians to clarify their own minds and only then seek particular types of aid within their overall Colombo Plan and technical assistance programmes, there would probably be regrettable delays in getting suitable Australian aid to this country.
3. There is at present no general economic development programme for Indonesia. It will be the function of the recently established 'Central Planning Bureau' (see our memorandum No. 5924) to draw up such programmes, but only three out of an eventual nine or ten members of the Bureau have so far been appointed and even they are all too frequently diverted to urgent current questions. Consequently a reasonably comprehensive plan is not expected for at least six months and possibly longer. However, a guide to present priorities in Indonesian development was given in broad terms in the Budget presented last month. The priorities in their approximate order are:
2. Industrial production
3. Library development and education
4. Transmigration (from Java to less crowded areas)
5. Labour relations
4. Within this framework of priorities I have discussed with the head of the United Nations Technical Assistance Mission, Mr. John S. Reid, the question of what aid might usefully be given by Australia. You will be aware of Mr. Reid's close association with the Colombo Plan before his present appointment; in view of the fact that he now has overall control in the U.N. Technical Assistance matters in Indonesia he is well placed to indicate the particular types of aid which might be most usefully made available to this country. Suggestions which he thought might be well received by Indonesians are as follows:
(i) Vocational training:The establishment of institutions here for training e.g. plumbers, welders, motor mechanics and other technical workers. Before the grant of Independence these positions were mainly filled by Dutchmen and there are now serious gaps in these fields.
(ii) Technical education:(i.e. the training of young people in schools providing for both technical and general education activities.) This is a rather a longer term need that (i) above. Mr. Reid expressed the view that a great part of the Indonesian technical education system will eventually need to be recast.
(iii) Transmigration:The Indonesian Government attaches considerable importance to the moving of communities from crowded areas to less developed parts of Indonesia. Although our migration experience in Australia has not been exactly along these lines it is thought that it may be possible to set up, for example, a demonstration project in which advantage might be taken of Australia's migration experience since the war.
(iv) The establishment of health institutes for auxiliary medical personnel(e.g. nurses, midwives).
(v) Assistance in the establishment of industries, particularly for the production of consumer goods. Advice and training in management especially are badly needed.
(vi) There may be possibilities in agriculture, but at this stage we are unable to advise regarding any specific projects. It is hoped that it will be possible to provide further information shortly.
(vii) Gifts of rice, if available, would always be welcomed; offers of wheat would also receive consideration here, although naturally it would not be of as much interest to the Indonesians as would be the case with their staple food, rice, substantial quantities of which have to be imported each year. I understand that in principle the Indonesians would probably not object to the introduction of a counterpart fund for gifts of this sort. In practice, however, agreement on the details of such a fund might take a good while to arrive at; the Americans are still seeking, after eighteen months of negotiations, to reach a counterpart agreement on the aid which they are giving.
The above list, of course, is not exclusive; if you have any specific offers which you may be contemplating we shall be glad to make any enquiries here which you may desire. Mr. Reid has offered to provide through his organisation, on an informal and confidential basis, reports on any particular questions in which you may be especially interested.
5. With regard to the supply of capital equipment, we have so far been unable to ascertain what items are likely to be of the greatest interest to the Indonesians. It is expected, however, that further information will be available on this question when details of the investment programme for 1953 are published. The Finance Minister, Dr. Sumitro, recently informed me that an English translation of this and certain other Budget documents is being made and these documents will be forwarded to you when they are received.
6. I am not aware whether, in view of the Indonesian decision to associate itself formally with the Colombo Plan, you would propose to extend substantially the technical cooperation facilities which have so far been made available to Indonesia on an informal basis. I should appreciate your advice in this regard. We hope in any case to be able to let you have shortly some general comments on this matter based on experience in this field so far.
7. You might find it useful to have for comparative purposes the attached information regarding U.N. technical assistance for Indonesia this year.5 As we are sending you the only copy which we have of this information we should be glad if a copy could be sent back here in the event of further copies being made in Australia.
8. It is hoped that the above information will serve your immediate purpose. It can be [supplemented]6 in particular fields if desired. To assist us in informal discussions here it would be useful if you could provide some background information on the type of aid in general which could readily be made available to Indonesia if desired.7
9. I am enclosing two extra copies of this memorandum for distribution in Australia if required.
[NAA: A1838, 3034/10/15 part 2]