Remarks of President of the Republic of Indonesia at the Indonesia’s Economic Outlook 2023 at the Ritz Carlton Hotel in South Jakarta, DKI Jakarta Province, December 21, 2022

Bismillahirrahmanirrahim.

Assalamu’alaikum warahmatullahi wabarakatuh.
Good morning,
May peace be upon us all.

Distinguished Coordinating Minister for Economic Affairs and other Ministers in attendance;

Distinguished Governor of Bank Indonesia, Chairperson of the Financial Services Authority (OJK), and all president directors of financial institutions and banks, leaders of organizations and associations, as well as Chairperson of the Indonesian Chamber of Commerce (Kadin) in attendance;

Distinguished Editors in Chief;

Ladies and Gentlemen.

The current situation we face is uneasy. The situation is hard to predict, hard to calculate. Normative theories are no longer relevant to implement considering that [the challenges] we face are unusual. The situation is very difficult.

And we all know that in 2014-2015, we are the Fragile Five. We were one of five countries that are vulnerable. We remembered that there was taper tantrum. If we take a detailed look in [the period of] 2014-2015, our current account deficit was at USD27.5 billion in 2014. While in 2015, the deficit was at USD17.5 billion. If we take a detailed look, in 2014, our trade balance deficit was at USD2.2 billion.

To that end, at that time I ordered to ministers that we should be brave to change it. We should be brave to carry out structural reforms so such things that could affect Indonesia’s macro economy could be resolved, including related the Government securities (SBN). Around 38.5 percent of the SBN were owned by foreign investors. Currently, the foreign ownership is only at 14.8 percent. If [the SBN] is still dominated by foreign investors and our macro economy falters, the foreign investors will cash out. Our exchange rate will also crash. Thus, those are the efforts we made.

Let’s take a look at our current account balance. In Q3 of 2022, it recorded a surplus amounting to USD8.9 billion or 0.9 percent of our gross domestic product (GDP). It means that the improvement can be proved and seen in number. I always ask for the number. “Sir, it [the number] is better”, “What is the number?” I replied. I didn’t only say “Yes.” Indeed, I always ask for the number considering that it is vital. Then if one asks me, “How much our deficit in 2022, Sir?” I would say that the deficit will be at 2.49 percent. It drops dramatically compared to deficit during the COVID-19 pandemic. Those are the efforts we make in order to increase the healthier numbers of our macro economy.

Secondly, I also need to remind you about the pandemic onslaught. When Delta variant spread [in Indonesia], our daily cases reached 56 thousand. I remember that at that time almost 80 percent of ministers as well as people advised me to implement lockdown. If we had implemented lockdown that time, maybe, the story would have been different now. When Omicron variant spread, the daily cases reached 64 thousand at the peak. We remember that at that time we lack PPE, no oxygen, patients piled up in the hospital. Fortunately, we were still calm, not nervous so that we could manage the very difficult situation well. And today, our daily cases are at 1,200. And maybe later in the end of the year we will declare to end PSBB, PPKM. Such a history we must remember how very difficult it was.

Therefore, we must continue to improve our domestic capabilities. And one of the very hard things is that we’re letting too many state assets to become idle assets and unproductive ones. The permission has been given, the Ministry gave permission to the private sectors or state-owned enterprises. When a concession permit was given, it was abandoned for 20 years. Yes, nothing happened. 15 years, 10 years, nothing happened. I have ordered the Minister of Investment, the Minister of Energy and Mineral Resources to revoke the concession. Offer it to those who have the ability so that the land becomes productive. The asset will become productive. Previously, 2,078 concessions were revoked including forest and mining concessions. Revoke it and offer it to those who have good financial ability, the ability of human resources to work on these assets so that the they will become productive assets that positively  affect our economy.

Building was erected , but it was abandoned. It was not for rent nor used. It must be stopped. Tools were purchased, but were not operated. That is too much. You can check in government agencies, in State-Owned Enterprises. There are a lot of [abandoned assets]. Do you think I do not know about it? Of course, I know it. These are the things that lead us to be unproductive. It starts from this. Spending on unnecessary stuffs. It is spending on unproductive things.

Once again, we must boost our domestic capabilities. One of important things we do is downstreaming. Stop exporting raw material of mineral and coal resources. Indeed, we did not do it drastically. No, we do not stop all [in one time]. We stop it gradually. Nickel exporting is stopped then we continue focusing others. Previously the export of raw material of nickel only reached USD1.1 billion. This year, I have estimated that we can reach USD30 billion in 2022 [due to downstreaming]. From USD1.1 billion to USD30 billion. The added value jumped. We were harmed for years. We did not receive revenue from the tax, dividend, royalty, export tax. We also did not have jobs. We had nothing. This must be stopped.

And we will stop more. Previously we have stopped exporting nickel, we will announce another commodity that we have to stop exporting. After this I will announce, “Stop it,” That is it. We cannot let exporting the raw material anymore. No! Next year, there will be one or may be two that must be stopped. The reason is clear. The revenue jumped from USD1.1 billion to more than USD30 billion. From Rp18 trillion jumped to Rp460 trillion. If we continue, we will lose our revenue. Even if we will be sued, it is not a problem. [The stop of exporting] nickel was being sued. [Commodity] that we will announce will be also sued. It is tolerable. Let me know to keep suing us. The second one is sued, it hasn’t been finished yet, the third one is stopped, then we will be sued again. It is not a big problem.

I underscore, our task is finding more added value and that can be seen. I have said many times. In North Maluku, economic growth after downstreaming is at 27 percent. Once again, 27 percent. You can check which provinces in the world have an economic growth of 27 percent. Just let me know. Nothing. Overall, in Sulawesi the growth is at 8.24 percent year on year (YoY). Once again, 8.24 percent. If all the provinces carry out downstreaming, industrialization, we will carry out the real structural reform that we want to do. Amendment the law at the upstream level, then implementing it. Indeed, it is not that easy but we continue to make it.

Thus, we have to change our fundamentals. The prone one must be changed so that it becomes stable. The synergy among fiscal, monetary, and real sectors is vital. If it is not integrated, it will be dangerous. Monetary sector had its own way, fiscal sector had its own way, and also the real sector. We have to stop it. Now I am proud that there is a synergy among central bank Bank Indonesia, the OJK, the Indonesian Deposit Insurance Corporation (LPS), Ministry of Finance and players in Kadin. All share the same vision, goal. If it continues to be strengthened, the positive momentum can continue to be improved. Moreover, people’s purchasing power must always be maintained. For vulnerable groups, I noticed that we have to provide social assistance, pre-employment card (Prakerja), and so on.

Thirdly, the increase in export. If the downstreaming is successful, the export will increase. We all know that our trade balance recorded a surplus for 31 consecutive months.

Fourthly, the increase in investment. The momentum of world trust to Indonesia must be well optimized to lure more investment, capital inflow so that it can strengthen our fundamental.

Lastly, I have said earlier. The downstreaming of green energy is a key. In the future, as I have ordered, the strategy of downstreaming must be made in a large ecosystem that is supported by cheap green energy. This will be a premium product that we will be able to compete with other countries’ products. The green energy has to be cheap, that is the key. If green energy still costs 12 cents, 8 cents, what is it for? The hydropower for example in Kayan river, Mamberamo river should be, based on my calculations…. I don’t know it may be different from your calculations. It can cost from 2 to 4 cents which is far below coal. If we do the same thing at other rivers, it will be our great strength. These two things, downstreaming which is supported by green energy. The implementation is not that easy.

However, things that make me headache are usually reported to me. If there is a problem, the ministers always come to me. But if it is for fun like singing, eating, they never invite me.

That concludes my speech on this auspicious occasion.

I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.

(AP/HD/MUR)