The Image of the human tragedy in Aceh speak volumes. The situation is still evolving but in Indonesia we now estimate that approximately 100,000 people lost their lives with many others missing and traumatized. There are now thought to be almost 600,000 homeless in over 700 urban neighborhoods and villages. Estimates of the damage are still early but between the loss of livelihood and damage to private property and public infrastructure the total cost may end up between 1 and 1.5 billion USD. There are not, as yet, even initial estimates of the ultimate social and environmental costs.

The magnitude of the loss of lives and damage was initially underestimated. The earthquake and tsunami destroyed civilian and military buildings including schools, hospitals as well as ports and their equipment including schools, hospitals as well as ports and their equipment including communications. Many of those who would have been in the first line of response were killed or incapacitated. As the disaster unfolded emergency efforts ran into a number of obstacles. First, the most badly damaged areas were urban where most of the first response should have originated. This has made it necessary to bring in relief from outside the region. Second, Aceh has two main highways connecting it to North Sumatera and one was cut and other badly damaged and used by those fleeing the disaster. In the most affected areas the airports were destroyed leaving only the airport at Banda Aceh with the limited capacity for landing. As you are aware this has creating bottlenecks and choke points and slowing down the response. Finally, coordination in the face of a disaster and response of this magnitude has stretched our capabilities to the breaking point. Nevertheless as we enter the second week, while the situation remains difficult local government is now responding and assistance is reaching those in need.

Let me speak for a moment about the assistance the people of Aceh have received in this time of need. First, let me thank the people of Indonesia. The tragedy has truly proven an opportunity for the entire nation to reach out as one. Volunteers, funds and goods are being mobilized throughout the country. I would also like to thank our friends in the international community. It is not possible to mention all those involved but I would like to thank the immediate response and the assistance that we have received from our friends in Singapore, Malaysia, Australia, the US, Japan and China as well as the United Nations and other countries. The Acehnese and Indonesia people will long remember the images of your citizens and soldiers working with us to assist those in need. The presence at today’s summit of so many dignitaries is another testimony to this outpouring of concern and solidarity.

Let me turn briefly to our management strategy. As I indicated we are dividing the task into three phases. First relief, then rehabilitation and finally reconstruction. These are not actually discrete phases but one fades into the other. Nevertheless for planning purposes we envision that the immediate humanitarian relief operation will last for 6 to 12 months and be dominated by emergency operations. The rehabilitation phase will begin shortly and will be the dominant activity 6 months from now and last for another year and one half. This phase should allow us to restore services to the minimum levels required. Finally, we expect that the full reconstruction, and therefore recovery will be a process taking at least five years.

The challenge at this point is to deal with more than six hundred thousand people who are homeless or badly affected by the disaster, including the provision of water, food and basic shelter while electricity, communications and transport are restores. Beyond that we have to begin the massive and complicated recovery efforts, an effort that requires sensitivity to those so severely affected.

The government has split the oversight of this recovery effort into several parts. First, the National Coordinating Board for Disaster Management (BAKORNAS) under my chairmanship and the operational direction of the Coordinating Minister for Social Affairs is leading our relief efforts. This effort is mobilizing all the resources of the government, including the military, as we focus on emergency relief during the immediate crisis. They are also responsible for the coordination of the extensive domestic and international relief effort.

Developing the longer run rehabilitation and reconstruction effort has been assigned to the National Development Planning Agency (BAPPENAS). Finally the Coordinating Ministry for the Economy will focus on overall coordination as we restore economic activity in Aceh and North Sumatera.

This disaster has triggered the largest outpouring of donor assistance ever seen. While we wholeheartedly appreciate this assistance, it inevitably creates coordination problems. We do not want to risk either the relief or reconstruction efforts. Thus we have asked the United nations and the United Nations Development Program to support BAKORNAS in coordinating donor support for the emergency relief and initial rehabilitation efforts. The subsequent rehabilitation and reconstruction phase, for which the planning is now also getting underway, will be led by the Government of Indonesia supported by major donors such as the World Bank, the ADB, Japan and the US. Finally, we will prepare an assessment of the damage and a recovery strategy by the upcoming Consultative Group for Indonesia on January 19th and 20th.

Our effort will be guided by the following key principles. We don’t want to just re-establish the devastated areas but rather improve the lives of the people based on a comprehensive and holistic design. As we do this we are committed to listening to the people and especially their feeling and aspirations. We will also mobilize various experts, including geological experts to rebuild safe and sustainable communities. To achieve this we have established clear direction including, most importantly, on coordination between sectoral and regional programs at the national and local level. The government is mandated in our constitution to protect and provide for the widows and orphans left behind by the Tsunami and we will make special efforts to address their needs. Finally, this is a disaster of unprecedented dimensions, but it is important that we even-handed in dealing disaster in other regions, including the recent earthquakes at Alor in Flores and Nabire in papua.

We have established a joint center, including line ministries and donors to complete to damage and needs assessment. We have asked the help of the major donors in this efforts including through the provisions of technical assistance. We anticipate that this plan will be the key instrument to coordinate overall reconstruction programs involving GOI and donors. The plan will focus on restoring people’s livelihoods, and effective local administration, as well as public infrastructure and services.

Let me very briefly touch on our approach to financing the effort in Aceh. Our strategy has a number of elements. First, given pressing budget problems, we are looking to, as much as possible, use grant or highly concessional financing. More specifically, we will be looking at existing government and donor projects to restructure those with a presence on the ground in the affected areas. This is the fastest way to deliver effective assistance through proven mechanisms. Second we will look at new programs to redesign them to better match the needs in the affected areas. Third, we will be looking carefully over our entire portfolio of existing projects for those with unallocated or even contingency funds to assess how much of this money can be reallocated. Finally, given dimension of the disaster we will of course be assessing what new financing we might need, probably financed through a new multi-donor Reconstruction Fund. Such a multi-donor trust fund would have a number of advantages. It would allow us to use Existing budget mechanisms, project design, procurement etc. and would simplify the government’s management task, as compared to dealing with each donor separately. It will take some work to develop planning and governance structure s and we would be interested in the experience of others on this issue.

In concluding, let me say how proud we are of the response from the Indonesian people in the face of this adversity. Let me also say how much we appreciate the outpouring of support and assistance from our friends in the international community and our hope that this turns into concrete action to deal with the problem and mitigate future impacts. As the President indicated this is an opportunity for all of us to work toward a better future not only for our countries, but for the region and the world.

Jakarta, 6 January 2005