Remarks of President of the Republic of Indonesia at the 2021 Bank Indonesia Annual Meeting, 24 November 2021, at Grand Ballroom of Fairmont Hotel, Jakarta

Bismillahirrahmanirrahim.

Assalamu’alaikum warahmatullahi wabarakatuh,
Good morning,
May prosperity be upon us,
Om Swastiastu,
Namo Buddhaya,
Greetings of virtue.

Distinguished Chairpersons of the State Institutions;
Distinguished Chairperson of the Supreme Audit Agency of the Republic of Indonesia (BPK RI);
Distinguished Chairperson and Members of Commission 11 of the House of Representatives of the Republic of Indonesia (DPR RI);
Distinguished Cabinet Ministers;
Distinguished Governor of Bank Indonesia Perry Warjiyo and officials of Bank Indonesia;
Your Excellencies Ambassadors of friendly countries;
Distinguished Commander of the Indonesian National Defense Forces (TNI), Chief of the Indonesian National Police (Polri), and Governors, Regents, and Mayors;
Distinguished Chairperson and Commissioners of the Financial Services Authority (OJK) and the Indonesia Deposit Insurance Corporation (LPS);
Ladies and Gentlemen.

We should be grateful that the development of COVID-19 in our country, Indonesia, is getting better and the number of cases has decreased. In mid-July, the daily number of COVID-19 cases was 56,000. The situation was very bad. If you visited the hospital or monitored the situation at the Wisma Atlet, and in the regions, especially in the islands of Java and Bali, the Bed Occupancy Rate was very high, above 90 percent. Thank God, on November 23, the daily cases were recorded at 394, lower than that of the peak (of transmission) with 56,000 (cases).

Regarding vaccination, let me tell you that as of November 23, 2021, the total doses that we have injected are 226 million doses (of vaccine). The rate of the first dose vaccination is 65 percent and the rate of the second dose vaccination is 43.3 percent. This is a number that we should be grateful for and we hope by the end of this year we will have reached the target of 280 million to 290 million doses (of vaccine) delivered to the people.

We’ve been through this pandemic for a year and a half. We have previously thought that it was a matter of health and vaccination, but it turns out that this pandemic has impacted many sectors. The Governor of Bank Indonesia has said that almost all countries are now experiencing energy shortage, container shortage, and rising inflation. There is also an increase in producer prices that will affect consumer prices. It was never predicted that this pandemic would have an impact on other sectors that we had never anticipated before.

We should extend our appreciation to all personnel at Bank Indonesia as well as the Government officials at Ministry of Finance, the Financial Services Authority (OJK), and the Indonesia Deposit Insurance Corporation (LPS) for an excellent cooperation in solving the problems, including the small one. I am of the view that we must maintain our prudence because the uncertainty exists and is difficult to calculate. The key is our measure to control the pandemic in our country when the problems are getting more complex and the world’s uncertainty is also getting higher.

If we look at the economic growth in the second quarter, we have 7.07 percent growth. In the third quarter, we grew by 3.51 percent. Why did the economic growth in the third quarter drop from the (growth in) second (quarter)? It is because in July we implemented emergency activity restrictions (PPKM). For one month we restricted public activities because of the delta variant (of COVID-19) that we had not predicted. Today, our economic activity is getting better. If we look at the consumption sector, the consumer confidence index has returned to its normal position as it was before the pandemic. The retail sales index has also started to strengthen in line with the easing of people mobility. The numbers are very important for us in forecasting our opportunity in 2022.

On the production side, we have learned that the manufacturing PMI, Purchasing Managers’ Index of manufacturing, is higher than before the pandemic, namely 57.2. Before the pandemic, the number was 51. What does it mean? It means that the demand exists. When the demand exists, it means that manufacturers, factories, and industries will carry out production measures because of the demand. The number is very high, 57.2 percent. Factories, industries, and companies have been aware of the demand.

This morning I got the report from Minister of Finance that our tax revenues are very good, our customs and excise revenues are also very good, and the non-tax state revenues (PNBP) are also more than 100 percent. It grew by 18.2 (percent) Year on Year, a huge number, but then again, we must stay vigilant amid the uncertainty. We must stay optimistic yet vigilant.

We must also continue our efforts to achieve economic transformation. It must not stop. Structural reforms must not stop, because it is an important factor after we develop our infrastructure. Even though this is a transition period, we should not export our raw materials. The export must stop. We have started with nickel. Maybe next year, with a proper calculation, we can stop exporting bauxite. The next year, with a proper calculation, we can stop exporting copper. The next year, we can stop exporting tin. The raw materials must be exported in the form of intermediate goods or finished goods, because we aim to create the added value.

Take steel for example. When nickel exports were still allowed, maybe three or four years ago, we had US$1.1 billion. This year, I think the number has gone up to US$ 20 billion because we have stopped exporting nickel. The increase was from Rp 15 trillion to Rp 280 trillion. This will improve our balance of trade, our balance of payments and our current account.

In 2018, our trade balance was minus US$ 18.41 billion. In October, we recorded minus US$ 1.5 billion. With China, we used to have a trade deficit and next year, God willing, we have a trade surplus with China. What does it mean? It means that more of our goods will enter China with a better value than it was before. It happened because we have stopped nickel export. If we stop exporting bauxite, the value increase will also be more or less the same. We will achieve the target of around US$ 20 billion to US$ 30 billion. One commodity, two commodities, three commodities, four commodities. Imagine if we industrialize all commodities in our country. Even though we face lawsuit in the WTO, that is not a problem.

During G20 (Summit) I have told the EU and European countries that we don’t aim to disrupt their production activities. We don’t implement a closed economy. They can access our nickel but they must open their factories in Indonesia. They must bring the industry and the technology to Indonesia. It will be all right if we produce semi-finished goods, from nickel to cathode or precursor, while the batteries or the cars are produced in other countries, although it will be better if everything is produced here, because it will be more efficient. I have delivered my messages as clearly as possible. We don’t implement a closed economy, but they must carry out the production here. We want to create as many job opportunities as possible in our country, Indonesia. That is our goal.

Second, the strategy for green economic development. We must immediately start the development because our great strength is in this sector. We have green energy and renewable energy. Regarding Geothermal, we have 29,000 megawatts of power. For Hydropower, I don’t know the exact calculation because there are 4,400 rivers in our country, Indonesia. Take two rivers, Kayan and Mamberamo, for example. Kayan can produce 13,000 megawatts, Mamberamo can produce around 24,000 megawatts. The total is 37,000 megawatts from the two rivers. For 4,400 rivers, you can imagine the power they can generate.

This is the power of green economy that is produced from the green energy that we have. Beside rivers and geothermal, we have wind, marine current, and solar cell. If we manage the potential properly, with consistency and courage to make breakthroughs, it will become our economic strength in the future. The total renewable energy that we have, based on the updated calculation, is more or less 418 gigawatts or 418,000 megawatts, a huge number.

Third, the digitalization of the economy. This is very important. I forgot to mention that next month we will start building a Green Industrial Park in North Kalimantan, with an area, based on the last week report, around 13,000 hectares. Yesterday I received a report that because the demand for green products is increasing, we will expand it to 30,000 hectares, becoming the largest Green Industrial Park in the world, located in North Kalimantan.

Third, the digitalization of the economy. We have 2,229 start-ups. If we manage them properly, they will strengthen our economy. Indonesia’s digital economy potential in 2025 will reach US$ 124 billion. The most important thing is we must support small businesses, micro businesses, and medium businesses to access digitalization. We must facilitate them and provide access for them to enter our e-commerce and platforms so that small businesses can benefit from our economic transformation.

That concludes my remarks on this auspicious occasion. I agree with the Governor of Bank Indonesia that in 2022 we must stay optimistic, yet vigilant. We will open various sectors gradually. We must make the best of the opportunities that we have and at the same time we must also observe health protocols. Big events will be permitted, but they should be assisted by (COVID-19) Task Force. We must be vigilant because we see other countries have experienced the third wave or the fourth wave and we must prevent (the new wave of COVID-19).

That concludes my remarks.

I thank you.

Wassalamu’alaikum warahmatullahi wabarakatuh. (RI/LW)