Introductory Remarks of President of the Republic of Indonesia at Plenary Cabinet Meeting on Anticipation of Food and Energy Crises, at the State Palace, Jakarta, June 20, 2022
Assalamu’alaikum warahmatullahi wabarakatuh,
May prosperity be upon us all,
Greetings of virtue.
Distinguished Vice President, Coordinating Ministers, Ministers, Heads of Institutions, Attorney General, Head of the State Intelligence Agency, Commander of the Indonesian National Defense Forces (TNI) and Chief of the National Police (Polri), and Governor of central bank Bank Indonesia, Chairperson of the Presidential Advisory Council.
Once again, on the beginning of this Plenary Cabinet Meeting, I would like to remind everyone that we are currently not in a normal situation.
Energy crisis, food crisis and financial crisis have started to hit several countries. There are approximately 60 countries which are facing pressure due to debt. It suppresses their economy which currently has no foreign exchange, making them enter the so-called economic crisis, financial crisis. Several countries have begun experiencing the crises and the number is expected to rise. This is what we really have to anticipate. Once again, anyone should not think that we are currently in a normal situation.
Therefore, what we have, our commodity, must be kept to increase our strength. Everyone must prepare themselves. Do not spend our budget for energy subsidies. We are aware that food prices have all risen due to food crisis. The people should also be informed about this. Rice price is rising, do compare with other countries. Wheat price is rising. The public should know this. And the most terrible is the threat of hunger and the threat of extreme poverty that is starting to appear in other countries. It is estimated that currently 13 million people are starting to suffer from starvation in several countries.
The world is also facing energy crisis. Fuel price is rising sharply in all countries. I ask Minister of Foreign Affairs to inform this to the public, to compare our prices with other countries.
I also ask Minister of Energy and Mineral Resources to inform the public [on energy prices]. Tell the public that our condition is, compared to other countries, is still very much under control. However, we must stay vigilant. Regarding the energy crisis, whether it’s fuel, gas, diesel, Pertalite (RON 90), Pertamax (RON 92), or electricity, don’t expect too much and only rely on subsidies from Ministry of Finance. There should also be efficiency efforts. So both efforts must be carried out together. If Pertamina and PLN only rely on subsidy from the Ministry of Finance without efficiency in the companies, it will not work.
We must be efficient and prevent leakage in all energy resources. Everything must continue to go on like this.
In the short term, we must think how to increase production so that we do not depend on imports. The existing oil wells, even the small ones, should be encouraged to increase their production. For the short term, we must maintain the prices of food and energy commodities at a stable and affordable price for low-income communities.
Yesterday when I visited several traditional markets in West Java province, the price of cooking oil is at Rp14,000. I hope the price applies in all provinces throughout the country.
I have also asked Coordinating Minister for Investment and Maritime Affairs, as well as to the newly inaugurated Minister of Trade. They said that they need two weeks to a month for the prices to be evenly stable. I think that as soon as possible, we must try to reach a stable price so that it is affordable for the lower-class people.
Thus, although our fiscal burden is heavy, the Government has committed to continue providing subsidies to the lower-class people, both related to fuel, Pertalite (RON 90), diesel, gas and electricity. This is what we must continue to maintain. I ask the ministries/institutions and SOEs to carry out budget savings as much as possible so that the Government has fiscal leeway.
Regarding the food crisis, which I said earlier, there is actually an opportunity for food commodity that we can pursue in a short time. For land production, for example, planting corn only takes three months to 100 days. Planting rice also only takes four months. Planting soybeans to reduce our imports also takes three months to 100 days. We have a very large area of land, there are still a lot of abandoned lands.
Another example is oil palm. We can plant corn, porang (Amorphophallus muelleri), sorghum or something else among the palm trees. If domestic supply is sufficient, it’s very easy to market our food abroad. We have a large area of land, we have a lot of workers and farmers. We also have enormous potential from our ocean.
Imagine if we could produce food in the short term, we put our efforts in it, we not only can be self-sufficient and independent in the food sector, but also we can export it. The demand is there. Some countries have asked for 100,000 tons per month for rice and some have asked for 2.5 million tons this year. I think this will increase our foreign exchange reserves.
Therefore, I ask that we should focus on, first, increasing mass production, be it farmers, corporations’ or SOEs’ production. We must pay close attention to everything. We must not be trapped in daily routines. We are often stuck there so that the grand strategy is lost, the big opportunities are lost.
Moreover, the massive commodity planting must be in accordance with each region’s characteristics. Yesterday, I inspected sorghum in East Nusa Tenggara province with the Presidential Chief of Staff. They previously planted corn, but it did not grow. When they planted sorghum, it was green, very green, and the plants seemed very fertile. After it was checked, there used to be a lot of sorghum or cantel planted in the province.
Second, if we can mass produce the food commodity, do ensure offtakes who will contain the products. When farmers have produced a lot, it must be stocked, for example, by the State Logistics Agency (Bulog) and the RNI (food company PT Rajawali Nusantara Indonesia). The mechanism must be immediately decided. Yesterday, I have told Minister of SOEs to immediately decide [the offtakes], the products, and the financing.
Third, we must design the distribution process of the food commodity. The Bulog often stock up the commodity but they cannot distribute it so the food quality decreased or the food is even rotten. We must have a grand plan about everything. We have stated the grand plan, and we must also have the implementation plan.
It requires a good orchestration among ministries/institutions, SOEs, private sectors, regional governments, everyone. The Government’s budget for food security is very huge. In 2018 the total budget is Rp86 trillion. In 2022, the total budget is Rp92.3 trillion. It is very huge. The result must be concrete, otherwise we better shift the budget for rice or other food supply for the people. Out of the Rp92.3 trillion budget this year, Rp36.6 is allocated for ministries/institutions, Rp14.5 trillion for Ministry of Agriculture, Rp6.1 trillion for Ministry of Marine Affairs and Fisheries, Rp15.5 trillion for Ministry of Public Works and Public Housing, and Rp0.6 trillion for other related ministries.
For Ministry of Public Works and Public Housing, related to food security, the Ministry plans to build 61 dams, 29 of which finished its construction and this year the Ministry will build other nine dams. Next projects are building something that have direct impact to the people, such as ponds. We can build small in size but large in quantity. The other project is to build irrigation system as we saw in East Nusa Tenggara province. The irrigation system is a concrete action. This is our opportunity amidst global food crisis.
We are one of the five champions for global response to food, energy, and finance, so if we can export [food], it can help other countries. In my opinion, irrigation system as in Belu, East Nusa Tenggara province, ponds, dams are important to be built in all regions.
Then, for budget allocation of the remaining Rp33.8 trillion, it is used for fertilizer subsidies of Rp25.3 trillion. Please check this properly. Expenditure on rice reserves is Rp3 trillion, expenditure on food price stability reserves is Rp2.6 trillion, and expenditure on reserves of fertilizer subsidies is Rp2.9 trillion. It is huge. The expenditures and the results must be clear and concrete.
Once again, the world is in an uncertain and unfavorable situation. Then, the remaining Rp21.9 trillion was transferred to the regions in the form of special allocation funds (DAK). Minister of Finance and the related ministries should look at this thoroughly. As for physical DAK, it is Rp8.1 trillion, Rp0.2 trillion for non-physical DAK, and Rp13.6 trillion for Village Funds. The results and benefits must be clear.
That concludes my introductory remarks.
Lastly, regarding mouth-and-nail diseases on livestock, it must be tackled properly, following measures we take to tackle COVID-19. I think such measures can be applied for mouth-and-nail diseases. There are examples and methods. I think, please immediately implement them on the ground.
I thank you.
Assalamu’alaikum warahmatullahi wabarakatuh.