Directives of President of the Republic of Indonesia to Ministers, Heads of Institutions, Regional Leaders, and State-Owned Enterprise CEOs on Proud of Indonesian Products Affirmative Action, Grand Hyatt Hotel, Nusa Dua, Bali, March 25, 2022
Assalamualaikum warahmatullahi wabarakatuh,
May prosperity be upon us,
Greetings of virtue.
Distinguished cabinet Ministers,
Distinguished Governors, Regents, and Mayors across Indonesia, CEOs of State-Owned Enterprises,
Ladies and Gentlemen,
We are aware that all countries are currently facing economic challenges. The economic challenges, brought to us by COVID-19 pandemic and technological disruption and exacerbated by the war, have made things uncertain and cannot be calculated with exact numbers.
All countries are currently experiencing a tough situation.
In the past two weeks, I have received phone calls from several heads of state and heads of government. Yesterday I received a phone call from President Macron. Earlier I received a phone call from President Xi Jinping, from Prime Minister Justin Trudeau, and from Chancellor Olaf Scholz, the new chancellor of Germany. They said that they are having difficulties solving our common problems.
[The world is experiencing] energy shortage. Look at the increase in [oil] prices from US$ 50–60 per barrel to [US$] 118. The price has doubled. In countries that do not subsidize their fuel (price), the price of fuel has doubled. Here, sometimes a 10-percent increase can lead to three months of demonstrations. Now the price has doubled, meaning that it has increased by 100 percent. Gas prices increase, food prices increase, including soybean prices and wheat prices because the world’s wheat suppliers are Ukraine, Russia, and Belarus.
We are facing energy shortage, food shortage, and container shortage. The container shortage is very urgent. The increase in container prices reaches five to six times the normal price. In the past, under normal circumstances, we could easily get a thousand containers or two thousand containers per day. Now, looking for just one container is very difficult due to disruption and chaos with a very significant impact. Due to the container shortage, logistics distribution/goods distribution is disrupted, either from one country to another, from one province to another or from one island to another. The trade cost, the cost, is going up six times. What does that mean? the price of goods will also increase due to the trade cost, the cost of the container.
At the end of the day, consumers will buy goods at a much higher price. Be vigilant. We have to understand things like this. We have to understand the impact, which is a rising inflation. We are now still able to control inflation at 2.2 percent. The United States, which usually never records inflation of more than 1 percent, now records inflation at 7.5 percent. The inflation is rising in all countries. Even Turkey records almost a 50-percent inflation.
Governors, regents, mayors, CEOs of state-owned enterprises must understand and be able to find a way out to contain the situation. Therefore, the easiest thing for us to do is ensure that the State Budget, regional budgets, and state-owned enterprise budgets can spur our economic growth. We must have the same spirit to buy domestic products. We must be proud of our domestic products, products made in Indonesia.
(The participants give their applause)
No need for applause. I have been monitoring the details of the procurement of goods and services. Now we not only monitor macro policies, but must also monitor micro policies.
It disappoints me because the procurement of goods and services uses imported goods even though we own the budget for the procurement of goods and services. The central capital budget is Rp 526 trillion. The regional [government], Mr. Governor, Mr. Regent, Mr. Mayor, have Rp 535 trillion.
The Central Government has a budget of Rp 526 trillion. The regional governments have a budget of Rp 535 trillion. State-owned enterprises have a budget of Rp 420 trillion. This is a huge, very large number, which we often forget to pay attention to. If we use the budget, let’s say 40 percent of it, it can spur our economic growth. The Central Government and local governments can generate a 1.71-percent growth, state-owned enterprises can generate a 0.4 percent growth. [The Government] can generate 1.5 to 1.7 percent growth, state-owned enterprises can generate a 0.4 percent growth.
We will easily get a 2-percent economic growth, without investors, if we consistently buy goods produced by our factories, our industries, our SMEs. Why don’t we do this? It is such a foolish thing if we don’t do this, if we keep buying imported goods.
We must stop it. If we buy imported goods, we give jobs to other countries, meaning capital outflow. We create jobs there, not here.
If we buy domestic products, it means investment and jobs. The calculation shows that it can create two million jobs. If we don’t do this, it is such a foolish thing.
(The participants give their applause)
No need for applause because we haven’t done this yet. If later we do this, with a value of more than Rp 400 trillion, and everyone does this, we can give applause. The target is not much, only 40 percent in May. This morning I monitored that the value was just Rp 214 trillion.
[We must stop] buying imported CCTVs. We can produce our own goods. We [must also avoid] importing uniforms and shoes for soldiers and police. We can produce those products.
Regarding medical devices, Minister of Health, I am aware that hospital beds are produced in Yogyakarta, Bekasi, and Tangerang. We must stop buying imported products. Later I will announce [if institutions buy imported goods], regional hospitals buy imported goods, or Ministry of Health buys imported goods. Now it is very easy to get that data. I can monitor daily data.
Regarding agricultural machine tools, Minister of Agriculture, we import non-hi-tech tractors. This disappoints me. I visited Atambua yesterday, planting corn. I saw tractors, agricultural machine tools. Mr. Minister, we must stop it.
We are still importing pencils, pens and paper. Why? I am afraid that we do not work with details so we do not understand that we are buying imported goods. We also buy imported notebooks. We must stop it.
If we all buy domestic products, our economic growth will increase significantly. Our target is by the end of May, or before that, we can reach Rp 400 trillion. That will be very good for us and will give multiplier effects.
Look at the numbers: Rp 92 trillion at Ministry of Public Works and Public Housing, Rp 68 trillion in Ministry of Defense, Rp 56 trillion in Indonesian National Police (Polri), Rp 36 trillion in Ministry of Health, and Rp 29 trillion in Ministry of Education and Culture. Those are Institutions with big budgets.
At Ministry of Education and Culture, this morning I just checked that they have just used Rp 2 trillion. We used imported goods for desks, chairs, and laptops. We can already produce the products – all of them. We must stop it.
What does that mean? Economic growth is very possible. It is up to us, whether we are committed to it or not. If we do this, we will boost [our economic growth] as previously stated by Coordinating Minister and Minister of Tourism. I demand that the target of Rp 400 trillion in May be achieved. Do encourage SMEs, as many as possible, in your respective areas to enter the e-catalog.
I order Head of the National Public Procurement Agency (LKPP) Mr. Anas, after the number increased from 50,000 to 176,000 in e-catalog, to make it more than one million at the end of the year. We must make such a leap and regional heads (governors, regents, mayors) put our high-quality SMEs in the e-catalog.
I often hear complaints about the difficulty of the procedure for obtaining the Indonesian National Standard (SNI) and the difficulty of obtaining the certificate. We must simplify it.
Do we have the head of the agency that issue the SNI here? Do simplify it. Don’t make it complicated. And make it affordable. Our SMEs will find it difficult to have SNI if the process is complicated. You must simplify it so that they can enter the e-catalog. If we maintain this kind of spirit, our SMEs will be happy. They will produce and invest and buy machines to increase capacity because of the demand.
We talk about the State Budget, the people’s money, our own money, so we must avoid buying imported products. Once again, I would like to make it clear that if the goods are not included in the e-catalog, and the target is not achieved, I will announce it publicly. Do we have a deal? We will announce it. We must be open on this matter.
I demand that the policy be implemented immediately on the ground. It will be better if every region establishes a team for using domestic products.
Second, Minister of Finance and the National Government Internal Auditor (BPKP) must monitor the number of transactions and make daily reports to me. I told Minister of Finance yesterday that we will cut the Special Allocation Fund (DAK) for those who do not implement this policy.
Do we have a deal? It seems that you are afraid of the sanction. I will cut [the DAK] and I will suspend the General Allocation Fund (DAU) for those who disobey what we have agreed on today.
Regarding state-owned enterprises, I order Minister of State-Owned Enterprises to replace the CEO [who do not implement the policy]. It also applies to Ministries, but that is under my domain, through reshuffle. We have the money. This is our money and what we need to do is to buy our domestic products.
I will closely monitor it. I order the Attorney General to prevent imported good to be camouflaged as domestic products. There are a lot of aggregators at marketplaces. Do not ever think that we do not understand the matter. I have warned two technology companies and they have disappeared. I will monitor other companies.
We must monitor the policy implementation. Minister of Trade and Director General of Customs and Excise must monitor the implementation on the ground, monitoring where the goods go. Where does the medical device go? To Province A, to district B, to city C, or to Ministry E. Now it is very easy to monitor everything. Once again, immediately utilize e-catalog and local catalog.
I think that concludes my statement on this auspicious occasion. And we should also be grateful, and I would like to express my deepest gratitude to Governors, Regents, Mayors, the Indonesian National Defense Forces (TNI), and the Indonesian National Police (Polri) who have been working together in responding to COVID-19.
It has been a very tough job but I have seen the integration and synchronization. All stakeholders have been working hand in hand and we can see the results. Yesterday, I monitored that our daily cases were 5,800, down from 64,000. We hope that the daily cases will continue to decrease and we can travel to our hometown for celebrating Eid, God willing.
That concludes my statement on this auspicious occasion.
I thank you.
Wassalamualaikum warahmatullahi wabarakatuh,
Om santi santi santi om.