Directives of President of the Republic of Indonesia to All Ministers, Heads of Government Institutions, Heads of Regional Governments, Heads of SOEs, Commanders of Military Regions, Chiefs of Regional Police, and High Prosecutor Generals at JCC Senayan in Jakarta, September 29, 2022
Assalamu’alaikum warahmatullahi wabarakatuh,
May peace be upon us all,
Greetings of virtue.
Distinguished Vice President of the Republic of Indonesia K.H. Ma’ruf Amin,
Distinguished Coordinating Ministers and Ministers of the Onward Indonesia Cabinet,
Distinguished Heads of Institutions and Equivalent Commissions,
Distinguished Governors across Indonesia,
Distinguished Regents, Mayors across the country,
Distinguished Commanders of Military Regions, Chiefs of Regional Police, High Prosecutor Generals, and SOE Directors,
Ladies and Gentlemen,
I have stated this many times, but I will continue reiterating it to remind you all that the world is currently full of high uncertainties. All countries are facing difficulties. It is also very hard to predict, to calculate the global economy. Ask anyone to calculate it. They must have a difficulty. Where will it go? How will it be resolved? I will continue to reiterate it so that we come to understand and everyone has a sense of crisis. Every day, we hear about food crisis. Imagine, 345 million people in 82 countries suffer from acute food shortage and it is truly devastating that 19,700 people die of hunger every day.
We must be grateful that last August, we received recognition from the International Rice Research Institute, also from the FAO, that since 2019 we have been self-sufficient in rice and our food security system is considered good. But we must not be pleased yet because once again, the world is full of uncertainties.
Food crisis, energy crisis. We just adjusted the prices of fuel oil, but compare them to those of other countries. The prices reach Rp32,000, Rp30,000. Rp24,000. Gas prices can soar by 500 percent. We must be aware of such situations, financial crisis. Recently, a country, the United Kingdom, has just submitted the State Budget, then the market saw firsthand that the currency exchange rate of all countries is shaken, weakened, depreciated, including ours. We must be careful of these uncertainties.
Every day we are always reminded of it and if we read, whether on social media, on print media, or on online media, they all inform us about global recession. This year is difficult and next year, I am telling you once again, will be dark. We do not know how big the storm will be, how strong it will be, whether we can calculate it. It is even harder to predict when the war in Ukraine will be over. The referendum carried out in four regions in Ukraine; in Donetsk, in Luhansk, in Zaporizhzhia, in Kherson, has made it more complicated to predict when it will come to an end and what the impact on the economy will be. More complicated.
The first thing I want to address, the biggest issue for all countries right now is inflation, price increase of goods and services. This is every country’s issue. Inflation in all countries used to be at 1 [percent]. Now, it is more than 8 [percent], more than 10 [percent], and even above 80 percent. Inflation in five countries has exceeded 80 percent.
Therefore, we must be unified. The Central Government, provincial, regency, city governments and all ministries/institutions must unite like when we handled COVID-19. If we are able to handle COVID-19 together, we must also handle inflation together. Agreed?
In other countries, inflation is handled by central banks by increasing the interest rate. The basis point is increased, so credit is held back. There will be smaller amount of money that goes to the people, so the inflation rate decreases. However, those theories do not guarantee that the inflation rate will drop.
Thus, in Indonesia, fiscal and monetary policies must go hand in hand. And I am happy that our central bank, Bank Indonesia (BI), and Ministry of Finance, the Coordinating Ministry go hand in hand and are working in harmony without us intervening the independence of BI. The more important thing is not to lessen the amount of money in circulation but to resolve it in the end, to stop goods and service price increase. That is our shared responsibility.
One of our biggest challenges is food inflation. Food is the largest contributor to inflation as of this August. Be careful of handling red chilis, shallots, chicken eggs, tomatoes, tofu, instant noodle, tempe, and rice. Be careful. Please pay more attention to these items. Check them on a daily basis because every day, the figures keep always changing. Every day, I never have breakfast. I never eat in the morning. The figures are my breakfast.
Red chilis. Why is the price high? Because the production is low, so the supply is low. You have a duty to ask farmers to plant these if the price of red chilis in your area is high. Chili supplies indeed vary. Two days ago, I came to a province and found out that red chilis cost Rp45,000. I went to another province and it costs Rp85,000-90,000 there. It’s double the price. We must be careful because a lack of production leads to a lack of supply.
Hence, as Coordinating Minister for Maritime Affairs and Investment said, use General Transfer Fund. Use contingency budgets to produce the goods to obtain sufficient supply. It is actually not hard. It is up to us whether to work on the details or not, whether we only work at the office to sign papers.
Second, we have to deal with transportation costs from the production area to the market. For example, the price of eggs increased. Where are eggs produced? In Bogor, in Blitar, in Purwodadi, and so on. If the price of eggs rises in Palembang, in South Sumatra province, then get the eggs from Bogor. Let merchants and distributors buy eggs from Bogor, but the transportation costs should be covered by regional budgets, by the province, regency, or city. For example. It’s an example.
How much does transportation from Bogor to Palembang cost using a truck? I checked. It costed approximately Rp10 million. After the fuel price is adjusted, it will probably cost Rp12 million. Rp10-12 million. The eggs will not be transported every day. Perhaps only twice or once a week. How come every day we have to deal with eggs only? No, right?
For example, shallots. Where are shallots produced? The largest production area is Brebes. For example, the price of shallots in Lampung is high. The transportation cost from Brebes to Lampung should be covered by provincial budgets, city budgets, or regency budgets. It will not cost a lot either. It costs approximately Rp8-8.5 million from Brebes to Lampung and we will not buy shallots every day either. No. We probably only buy them once or twice a week. The amount of money is small, but we have to work thoroughly. Kediri produces a large amount of chili. If Jabodetabek (Greater Jakarta area) buys it, just cover the transportation cost from Kediri to Jabodetabek, approximately Rp11 million.
We must carry out concrete matters like this. We cannot—once again, I have repeated it many times. We can no longer work only in macro scale in such a situation. Working in micro scale will not be enough either. We must also work on the details to find the problems and resolve them. I am certain that if everyone works on the supply, the production side, the transportation cost is covered by regional budgets, by contingency budgets, by General Transfer Fund, it will not be difficult to reduce inflation, then BI will also make a move.
I suppose it is clear. Is it clear? Do not hesitate to use contingency budgets and General Transfer Fund because the Regulation of the Minister of Finance and Circular of Minister of Home Affairs have been issued. I have also addressed this issue to the Attorney General Office (AGO), to the Corruption Eradication Commission because we really need it.
Second, regarding the use of Indonesian products, the follow up of affirmative action on Proud of Indonesian Product (BBI). Coordinating Minister for Maritime Affairs and Investment said that the realization of the commitment is already 49 percent. In this difficult economic situation, the State Budget and regional budgets, which we obtained from taxes, from customs and excises, from non-tax state revenue (PNBP), from SOE dividends, must not be used to buy imported goods after they are transferred to regions. There are products from MSMEs and cooperatives. Why don’t we use them?
I am happy. Thank God. I set a target of one million [products] by the end of the year. Now, there are more than one million MSMEs and cooperative products listed on the e-catalog. Beforehand, it was only 50,000. The number skyrocketed. I order all heads of regional governments to continue to foster MSMEs and cooperatives in their respective areas, so many products can be listed on the e-catalog.
During the last meeting, I stated that if you do not move quickly, I will disclose the data. Which ministries, which regions have not done it yet. What is the realization? For ten ministries/institutions that have a lot of budgets, this is the realization.
I have the data. I have all data from regional governments, provincial governments. Please check the domestic spending of regency and city governments. Those with zero spending probably have not spent their budgets on domestic products or have not made a report, so please report it soon. Some SOEs are among those institutions. We have the data now. We can check. Use domestic products.
Second, regarding tourism, let us invite our people. We can have deficit in our tourism. We do not have many visitors, but many of our people travel abroad. Be careful. This can cause a deficit of foreign exchange if we take no precaution. Beware. Once again, do invite the public to travel in our own country, Governors, Regents, Mayors. Agreed? We have good tourism areas; Bali, Labuan Bajo, Wakatobi, Toba, Raja Ampat, Bromo, Jogja, Babel, Borobudur, Jakarta, and many others. In a global crisis like this, why do people choose to travel abroad? They show it off on Instagram, including public officials.
I can receive more than 20 invitations to visit other countries in a year, but I only go to two or three countries. If it will not bring benefits to the country, I refrain myself from going to save the budgets. We must also tell the people to travel within the country instead.
Finally, on extreme poverty. The data is clear. We have the data. We have the data on all regions. It means that the targets are clear, by name, by address. Everything is there. If we work together, if the Central Government and regional governments work together, we can reach our goal, of we work on the environment, on clean water supply, on income, on everything together.
During COVID-19, our poverty rate increased to double digit. Now it has dropped to 9.54 percent. We have the targets. The names and addresses are clear. We will disburse social assistance to these targets. As for slum upgrading, do use these data as well. If the names and addresses are unclear, we will face a difficulty, but we have all the data. Once again, we must unite to work together toward reaching our goals.
I suppose everything is clear. I want all of us to take concrete actions together. That concludes my statement.
I thank you.
Wassalamu’alaikum warrahmatullahi wabarakatuh.