Introductory Remarks of President of the Republic of Indonesia during Plenary Cabinet Meeting at the Garuda Palace, Nusantara Capital, East Kalimantan Province, August 12, 2024

Bismillahirrahmanirrahim.

Assalamu’alaikum warahmatullah wabarakatuh,

May prosperity be upon us all,

Namo Buddhaya,

Greetings of Virtue.

Distinguished Vice President of the Republic of Indonesia;
Distinguished Mr. President-elect, Mr. Prabowo Subianto;
Coordinating Ministers, Ministers, Commander of the Indonesian National Defense Forces (TNI), Chief of the Indonesian National Police (Polri), Attorney General, Head of the State Intelligence Agency;
Ladies and Gentlemen.

We offer our praise and gratitude to Allah SWT for granting us the ability to conduct this Plenary Cabinet Meeting, which is particularly special as it is the first to be held in Nusantara Capital (IKN). IKN is a blank canvas upon which we are shaping the future. Not every country has the opportunity or the capacity to build its capital from scratch.

Nusantara is being developed as a forest city, a green city, and not a city full of glass nor a concrete jungle. It is also designed as a smart city, where technology supports every aspect of the city life. Furthermore, it is intended to be a livable city, offering a comfortable environment for its inhabitants. This morning, we could feel how cool, cold, and fresh the air is, with an air quality index of 6, much lower than the maximum threshold of 50. In contrast, many cities today already exceed that number.

The relocation to Nusantara Capital, as I have often stated, is not merely a physical move but a shift in mindset, in our way of thinking, in our work patterns, allowing us to work from anywhere, and a change in our mobility. In Nusantara, all mobilities will rely on electric vehicles, and the energy used will be green energy. Even the buildings are oriented towards green architecture, with accessibility prioritized for pedestrians and cyclists.

Nusantara will emphasize the development of green and digital economies, which will underpin the governance of Nusantara Capital. Once again, our focus will be on advancing the green economy, digital economy, data centers, financial centers, and others.

If asked about the benefits for the people of Kalimantan, especially East Kalimantan, I am confident that this initiative will stimulate economic growth in East Kalimantan province, particularly in Balikpapan, and even more so in North Penajam Paser regency.

One of the reasons for relocating the capital is to promote more equitable development. Currently, 58 percent of the GDP is concentrated in Java [island], and we aim to distribute economic activity more evenly across other regions. Additionally, Java bears an enormous population burden, with 56 percent of the nation’s population residing on the island. This has also been a consideration in relocating the capital. The main reason, however, is the overburdened state of the current capital, Jakarta.

As of today, I must also inform you that, outside the state budget, there has been an investment of IDR 56.2 trillion from 55 projects that have already commenced. These projects include six educational institutions, three healthcare facilities, ten retail and logistics developments, eight hotels, two energy and transportation initiatives, 14 offices and banking projects, nine housing and green area projects, and three media and technology ventures.

The second matter I wish to address in this Plenary Cabinet Meeting is related to the PMI (Purchasing Managers’ Index). After an expansionary period of 34 consecutive months, our PMI slipped into contraction territory in July. This needs to be carefully observed and monitored because several countries in Asia also have PMI readings below 50, namely Japan at 49.2, Indonesia at 49.3, China at 49.8, and Malaysia at 49.7. The components that have experienced the most significant declines include the production sector, down by 2.6 percent, followed by new orders, down by 1.7 percent, and employment, down by 1.4 percent.

I want the root cause to be swiftly identified and addressed, as this PMI decline has been occurring for the past four months. We need to carefully examine why domestic demand is weakening. This could be due to the high costs of raw material imports, driven by the currency fluctuations or the influx of imported products into our market. Therefore, I once again emphasize the importance of purchasing local products, using local raw materials, and protecting our national industries. It may also be due to weakening export demand caused by supply chain disruptions or economic slowdowns among our key trading partners. Therefore, we must be able to find non-traditional markets and explore new export potential markets.

That concludes my remarks on this auspicious occasion. Please feel free to share your thoughts if there is anything else you’d like to discuss.

I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.

 (AY/MMB)