Directives of President of the Republic of Indonesia at the 2023 Meeting with Acting Regional Government Leaders across Indonesia at the State Palace, Special Capital Region of Jakarta, October 30, 2023
Assalamu’alaikum warahmatullahi wabarakatuh,
May peace be upon us all.
Distinguished Minister of Finance, Minister of Home Affairs,
Distinguished governors, regents, and mayors in attendance this afternoon,
I would like to extend several things related to challenges and what we must do in response. We are all aware that the world is not doing fine. I often say that the world is becoming more obscure. The global economy is uncertain and hard to calculate. The Minister of Finance has plenty of experiences, but it is truly not easy to calculate, to predict the current global economic situation. It is often unpredictable. The interest rate increase in the USA, for example. The USA increased it, but all developing countries are affected due to capital outflow. All dollars are withdrawn back to the USA. That is the first.
Second, climate change. Many people used to say, “What is that? It is invisible.” Now, it is evident. Droughts in seven provinces and several countries have resulted in decreased rice production. Meeting our needs through imports is not as easy as it used to be. Finding imported rice is not as easy as it used to be. Twenty-two countries have stopped and reduced their exports because they want to save their people as well. Ladies and Gentlemen, you must understand situations like this. You must be aware that the world is not doing fine.
I spoke with Prime Minister Narendra Modi. He has rice supplies, but he is using them for reserves. He is afraid to sell it. I spoke to him, but he is afraid to do it. The same goes with neighboring countries, Vietnam, Cambodia, and Thailand, which usually offer [rice exports]. They can [export], but the amount is very limited. This is the situation.
Furthermore, wars. We are already concerned with the war in Ukraine. It is not over yet. When it will be over is unclear. Now there is a Hamas-Israel war. It seems that Ukraine is far. What is the impact on Indonesia? Beware. Last year, I met with President Zelenskyy and we talked for 2.5 hours. He told me that the wheat supply in Ukraine, 77 tons of it, cannot be exported. Afterward, I met with President Putin for 3 hours. He told me that 130 million tons of wheat in Russia cannot be exported. It means that 207 million tons of food are stuck in two countries. Our annual rice consumption is 31 million tons. Meanwhile, 207 tons of foods are stuck in these two countries. What are the impacts? Wheat prices skyrocketed. Many countries cannot afford the prices, resulting in famine, including in Europe. Beware. All of you must understand and be aware of such situations.
Moreover, Hamas and Israel in Gaza. It seems that the war is so far away, but be careful if the war expands. If Hamas-Israel [war] expands and involves Hizbullah in Lebanon, involves Syria-Houthi, involves Iran, involves many parties that want to help, oil prices will rise. It will concern all countries. However, thank God, as of now the rise of brent [crude oil price] is not so high because the war has not expanded and remains in Gaza. You must be aware of and understand such situations, so when you work, you know what to do. Understand. What will happen if fuel prices soar? Inflation will rise. If inflation occurs, prices of goods and services will also increase.
At home, seven provinces were hit by Super El Nino. Productions dropped. We all must be vigilant of it and we must not take the situation lightly. Be careful. The last time I checked, rice [prices] rose by 19.8 percent year to date (ytd) and 2.5 percent month to date (mtd). Be careful. If regional governments have the ability, do immediately intervene so that food inflation will not worsen. Such an issue must be resolved. Therefore, it is important to monitor markets. Monitor markets, monitor the supplies in regencies, in cities, in provinces. Check and monitor. Do not be stuck with daily routine and administration. We must first check the important things. Manage the administration once it is done.
Indeed, prices go up and down at markets, but please do control them. Maintain supplies, monitor prices, take a hands-on approach. I check because I always have numbers. Inflation [rate] in provinces is between 1.1 percent and 3.5 percent, it is good. In regencies, be careful, the rate ranges from 1.1 percent to 5.2 percent. Some regencies have reached 4 and 5 percent. Beware. In cities, it is between 1.1 and 4.2 [percent]. Those with [inflation rate] above 4 [percent], please be careful.
Actually, budget for unexpected expenses can be used to curb inflation. Can’t it, Finance Minister, Home Minister? Is there a legal umbrella? There is a legal umbrella. I asked if there is already a legal umbrella. Do not hesitate to use budget for unexpected expenses, especially when inflation rate increases, if prices drastically soar. Do immediately secure the supplies. Sometimes it is only a matter of supply and demand. The demand remains the same, but there is no supply. Do immediately get the supply directly from the production area. Shallots, for example. If the prices rise in your regency, get the supply directly from Brebes, for example. If rice prices increase, get the supply from regencies that have rice surplus so that it is under control using budget for unexpected expenses. What should be covered? The transportation fee. Regional governments cover the transportation fee so that the prices remain the same as those in the production area.
Why do I talk about it? As you all know, I chose you because you have experience in the government and you do not have political burden, do you? You became governors, mayors, and regents without spending money, unlike those running for regional elections; governor elections, mayoral elections, regental elections. It means that you do not have political burden. Therefore, I hope that it becomes easier to make policies with technocratic considerations. It should be easier to make policy breakthroughs. You must be able to determine your priorities. You must have clear priorities when it comes to work. Do not be stuck with the routine. You must be goal-oriented. Procedures will follow, but you must be goal-oriented and make breakthroughs. Focus on your work. Deal with important matters such as economic growth and inflation. Those are important matters, fundamental matters that we must…
Therefore, once again, let me reiterate. Control inflation. Do maintain the stability of prices, especially basic necessity prices. Monitor real prices at the market. Take a hands-on approach. If a problem occurs, make interventions as I have said before. You can give subsidy for transportation.
Second, the impact of Super El Nino on commodity production decrease, especially on staple food in your regions. Do pay extra attention. Although it has begun to rain, I need to remind you to be vigilant of fire potentials. Do immediately put it out when [the fire] is small. If you cannot do it, inform the central National Agency for Disaster Management (BNPB) shortly. Beware of it.
Third, economic growth is largely affected by investment, investment climate. Help investors, especially in licensing services. Licensing must not take months to process.
Just so you know, in the United Arab Emirates, licensing takes less than 30 minutes to process. It is completed within 30 minutes. I experienced it. It has been that way for 23 years. I invested there. I came to the economic office and submitted the required documents. “Go to the next building, to the notary’s office.” I went there, signed papers, and was told to return. “Go to the desk you went to earlier.” I went there and was given the license. I was able to build a factory, an office, a showroom, a warehouse, everything. Within 30 minutes.
How can we compete if it takes months to process a license? You have to go to this desk, that desk, this desk, that desk. Governors, regents, and mayors must sort it out because now all countries are vying for investment. They want to invest here, but why do we make it complicated? We are the ones making them call off their investment. Simplify the procedure, facilitate them, manage the governance. There must not be any illegal levies because it will create jobs. Why do all countries vie for investment? Because it create jobs.
Fourth, allocate [budgets] for economic stimulus and social assistance. In situations such as this, when rice prices increase, you must give social assistance, hold cheap market events like the Central Government. The Central Government gives 10 kilograms of rice per month. It has been distributed in April, May, June, then in September, October, and November, and we decided to hand it out again in December. Ten kilograms [per beneficiary] until December from the Central Government. How much can regional governments give? Five kilograms? If city/regency governments give five kilograms [of rice], the problem will be solved. The public will be appeased. And I also urge you to purchase local products, especially from our MSMEs.
Fifth, support the Government’s priority programs; extreme poverty alleviation, stunting alleviation, industry downstreaming. Give full support to Government programs.
Finally, sixth, we are entering a political year, election year. I urge governors, regents, and mayors to give support for the duties of the Regional General Election Commission (KPUD) and the General Election Supervisory Agency (Bawaslu), but not to intervene in anything. Just assist them by preparing the budget shortly.
In addition, I order that there be no partisanship. You are under scrutiny. It is easy to notice whether you take a side or not. You must also make sure that state civil apparatus remain neutral. Lastly, do maintain harmony at the grassroots. Do immediately solve issues that are related to politics. Solve it properly.
I will continue to keep up with your work and duties. If a problem occurs, do inform Minister of Home Affairs. If it is a difficult problem, do inform me directly so that we can help. However, if you can solve the issues, do not escalate them to Minister of Home Affairs or the Central Government. Resolve them on your own and I suppose all of you are capable of doing so.
Governors, regents, and mayors, how frequent is the evaluation carried out? You are evaluated every three months by Minister of Home Affairs, but I evaluate you on a daily basis. Do not applaud me. I carry out daily evaluations. Be careful. Once you go astray, I can replace you at any time. That is a prerogative I have. Please do follow my orders. I do not ask too much of you.
That concludes my remarks on this auspicious occasion.
I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.