Directives of President of the Republic of Indonesia During Briefing to Provincial Chambers of Commerce (KADIN) throughout Indonesia at Taman Mini Indonesia Indah East Jakarta Administrative City, Jakarta, Tuesday, August 23, 2022
Assalamu’alaikum warahmatullahi wabarakatuh.
Peace be upon us all,
Greetings of Virtue,
Honorable Minister of State Secretariat, Minister of Public Works and Public Housing,
Honorable Chairperson, Vice Chairperson, and all leadership of the Indonesian Chamber of Commerce, Honorable Chairpersons of Provincial Chambers of Commerce and all its ranks,
Ladies and Gentlemen,
Probably I have reiterated so many times regarding global economic uncertainties, but I need to repeat it because this has not ended yet.
It is not getting easier.
It is getting even more complicated.
Previously, for example, it was estimated by international institutions that nine countries would collapse; then an additional 25 countries would collapse; an additional 42 countries would collapse; lastly, 66 countries would face economic collapse.
And, one by one, it has started to happen. This is what we are facing today – a situation that is not easy. A situation that is very difficult with unrelenting pressure starting from health crisis due to the pandemic, food crisis, then energy crisis, also financial crisis. It is not easy. On food alone, it is terrible.
When I went to Ukraine, then to Russia, I met President Zelenskyy and spoke for an hour and a half while with President Putin, I spoke for two and a half hours. I see that, I actually wanted a space for dialogue. But, on the ground, it was difficult to bring them to a table so I chose to talk about other things. I talked about food crisis.
The Ukraine President said that in Ukraine alone there are 22 million tons (of wheat) stocks, plus a new harvest of 55 million tons, meaning that there is 77 million tons in Ukraine.
In Russia, I asked President Putin on how much wheat is there in Russia. There are 130 million tons. This means that the total of (wheat stocks) of both countries reaches 207 million tons. We only eat 31 million (tons) of rice per year and the 207 million tons cannot get out of the countries. You can imagine countries that import wheat from the two countries, especially those in Africa. They are currently in a very difficult situation.
If we look at the Food Price Index, for example, during a food crisis in 2008, it was at 131.2 (percent). During the 2012 food crisis, it was at 132.4 (percent). But now, the index is already at 140.9 (percent), which is terrible. At first, there were only six countries that limit their food exports, now there are 23 countries. It is quite normal.
Therefore, we should be grateful that two weeks ago we were presented with a certificate from the International Rice Research Institute stating that our food security is good and our rice self-sufficiency has started since 2019. While countries are facing shortage of food, we are actually declared as self-sufficient in rice and our food security system is strong.
On matter like this, we don’t need… Yes, we have to be careful. Yes, we need to be vigilant. But, don’t be a pessimist. This is something that, once again, I don’t want you to be. We still have to be optimistic because in every difficulty there must be an opportunity there, for sure. In the most difficult condition, in any situation, there will be opportunities, and those who can make the most of these opportunities are entrepreneurs, entrepreneurs, ladies and gentlemen. There’s no one else.
Where are the chances? There is a food crisis, meaning the opportunity is also in food. When it comes to selling food, it’s the fastest right now. Yesterday, for example, China asked for 2.5 million tons of rice. From another country, Saudi Arabia, for example, asked for 100,000 tons of rice a month. Currently, we are not complying with the requests as we have stopped the export. But, as soon as there is jump in the production, because you are in the sector, the stocks can be abundant and we can export it at a very feasible price, at a very good price.
The second is import substitution. We have to stop importing goods, whether we like it or not, under these conditions, so that our foreign exchange is not used up to pay… our dollars are not used up to pay for imports. What are we still importing? 11 million tons of wheat. In Indonesia, you can’t grow wheat, you can’t. We can mix wheat. Wheat can be mixed with cassava. Wheat can be mixed with sorghum. Wheat can be mixed with sago, and others.
It means I invite all of you, for example, in East Nusa Tenggara, is East Nusa Tenggara Provincial Chamber of Commerce here? Plant sorghum. East Nusa Tenggara is a place for sorghum, very fertile and feasible. Just try it, it doesn’t have to be thousands of hectares. Try 10 hectares first. You can check whether what the President said is true or not. You can count it and calculate it. Come in, plant as much as possible. It will later be used for the wheat mixture.
I saw yesterday in Waingapu in East Nusa Tenggara where water is not available, the soil is marginal, but sorghum grows very fertile. If you want to look for thousands of hectares, hundreds of thousands of hectares of land in East Nusa Tenggara, there are a lot. This is what we are waiting for from regional chairpersons of chambers of commerce.
Corn, both for our food and for livestock feed, is in great demand, both in the country and abroad. Our current imports of corn are still at 800,000 tons. Previously, seven years ago, we imported 3.5 million tons. What does it mean? There is an opportunity. Wherever you plant the corn, it will grow. Chairpersons of Chambers of Commerce do not do it in a traditional manner. Apply mechanization, make a consortium, plant in 100,000 hectares of land with modern tools, and fertilize using drones. This is what a chairperson should do. I don’t want this to happen, “Sir, I have planted (the corn),” “how big of land?” “10 hectares, Sir.” A chairperson with only 10 hectares.
The second one is downstream. I know many members of KADIN have mines, including the Chairperson. I say that this can no longer be put on stop. On nickel which we put on a stop to, it caused quite a response three years ago. Many visited me including many of you here. “Sir, we are not ready.” If we keep waiting, when will we ever be ready? There is no ready or not ready. We are being sued at the WTO. You can sue us. There is no problem.
In the past, seven years, five years, six years ago, our exports of nickel were at US$1.1 billion or around Rp16 trillion. In 2021, Our exports of nickel reached US$20.8 billion. Calculate it, from Rp16 trillion to more than Rp300 trillion, to Rp306 trillion. We must be aware of this fact; we can no longer export raw materials as we did for decades. Please don’t be surprised, I told you this and I’ve said it many times; don’t be surprised if I’ll stop the export of bauxite later; don’t be surprised if I stop the export of copper; don’t be surprised if I stop the export of tin; don’t be surprised if I stop the export of raw materials we usually export. From nickel, we will get around US$35-40 billion at the end as we haven’t exported the derivatives.
So, our trade balance, our trade balance… I remember, 2012 was at minus US$7.7 billion with China. In 2021 because we have exported iron and steel, it is then at minus (US$)2.4 billion. This year, I will make sure that we will have a surplus, with China.
Please also do the same for other raw materials, not just nickel. Ladies and gentlemen, if you are not ready, join in, find a partner. It’s very easy now in Indonesia, asked the Chairperson. Daily, people come to invest, so just invite them, whether they’re from Korea, Japan, China, or Europe. Why? Everyone is afraid that we will stop exporting our raw materials. They have no choice, like it or not, they must come here and build their industry here. So, just invite them to join. If you have the permit, a mine with several million tons or several hectares. Ask them to join in because we really need technology. We also need investment so there is capital inflow. Things like this are a must.
Second, on MSMEs. I order Chairperson of the Indonesian Chamber of Commerce as well as Chairpersons of Provincial Chambers of Commerce to invite these MSME friends to enter the digital ecosystem. We have invited 19 million in the past two years, but the total of MSMEs is 64 million. Invite them all. Also, invite them to join the E-catalog. I have said this to the Chairperson of the Indonesian Chamber of Commerce also you in the regions. Superior products in the provinces, regencies, cities, invite them all. I want them to be included in the E-catalog. We now truly open our e-catalog for the medium, small, and micro-entrepreneurs to participate. So, there will be as many purchases as possible for domestic products for projects funded from the State Budget and that of SOEs.
This is very funny. The State Budget is collected from taxes, from non-tax state revenues, from royalties, then we spend the State Budget, it becomes the government spending. If we purchase imported products continuously, we are really stupid, no, the State Budget, the SOEs budgets, the state budget spending, the regional budget spending, we must buy domestic products.
I have ordered all regions to sign a commitment on how many trillions or billions they can purchase. It is at Rp897 trillion and this is an opportunity. Therefore, invite our colleagues from medium and small businesses to join the e-catalog. It’s very easy now, very different from a year ago. The system, the platform, everything, we simplify everything. This will be able to boost the economic growth that we already have.
We should be grateful that we can control inflation at 4.9 (percent) and increase economic growth from 5.01 percent in Q1 to 5.44 percent in Q2 amid countries that are now facing a decline or crash in economic growth
This morning, I also checked the electricity consumption. I often check the numbers, things that are important for us to see. Electricity consumption grew by 7.3 percent, indicating progress in the industrial sector, meaning factories are starting to expand. We should be grateful for this.
Credit is also growing. Previously, two years ago, a year ago, it was still at 1, 2, 3 percent, and now it is at 10.6 (percent). What does it mean? This will trigger our economic growth. Third party funds also grew 9.13 percent. It also means that this is mainly because many people at KADIN are saving in the bank because they have excess money. Non-performing loans are also still at 2.86 (percent), still, in my opinion, it is still very good. This is why we must stay optimistic. Of course, we must be vigilant and careful of uncertain situations in the global economy.
That concludes what I have to say on this auspicious occasion. Once again, we must continue building communication between the Government and KADIN, the Government and the business sector, so that this can continue. If there is something that bothers you, you can immediately communicate them to the Chairperson so that he can report it to the Government. This is to prevent matters to interfere with our course in improving the welfare of the Indonesian people.
This is the end of my statement.
I thank you.
This concludes my speech.
Wassalamualaikum warahmatullahi wabarakatuh. (FI/EP)