Keynote Speech of President of the Republic of Indonesia at the 2022 Kompas100 CEO Forum, Presidential Palace, Jakarta, December 2, 2022
Assalamu’alaikum warahmatullahi wabarakatuh,
Peace and prosperity be upon us.
Distinguished Ladies and Gentlemen, especially to all the attending CEOs this morning,
I don’t want to say anything about the world’s problem as some may say that I scare people in every speech. Therefore, I would like to convey our optimism in facing the future.
Why should we be optimistic? I have said many times that we have great potentials and power, but we often forget that we have natural and human resources. The estimated demographic bonus will emerge in 2030, translating into 201 million of our productive workforces.
Also, we have a big market not only in our country. Our country is the foundation, but ASEAN has 600 million. This is a power that we often don’t realize and I have to keep saying it, including our position on world trade routes.
It is this strength that we must keep in mind in order to build a grand strategy, state business, and state economic grand strategy so that we can achieve the vision we desire.
Indeed, we have long stated that Indonesia has an open economy. Yes, economic openness. However, don’t misunderstand the term. The same mistake happens in Latin America. They opened their economies and in the ’50s, ’60s, the countries there reached the mark for developing countries, middle-income countries. But what happens when we look into it in detail? I won’t mention the country, it’s sensitive. What happened? It has been more than 50, 60, 70 years since their country became developing ones, not continuously developing, but still becoming developing countries. Continuously being developing countries, I observe to see what is wrong. The problem is in interpreting openness as making as wide as possible [opportunities] for investors. This is correct but be careful.
I see differences in Taiwan as well as South Korea. We have to consistently pursue this design. That is, first, making other countries depend on us. Actually, I have checked several times on who really depends on us. It turned out that there are a lot of them. As soon as our coal [exports] stopped for only two weeks, many heads of state, prime ministers, and presidents called me. So, this one depends on us, that one, also that one, so many of them. I was surprised too. This is on coal.
Likewise on CPO (crude palm oil), as soon as we stop [the export], yes, because I have to stop it, there are many questions from abroad, from the IMF, from the World Bank, “Why do you stop it?” Yes, because we don’t have enough goods in the country. I have to put my people first, I said, I can’t give it to you making the country at a loss due to the lack of oil, we won’t do it. I won’t. I have to stop it. Many say that it is wrong. Well, that is okay, people’s opinions differ. I put my people first. And, it turns out that until now we can also stabilize the price of cooking oil without having to cap it. We can. I checked yesterday at two markets, just a day or two. They are still at Rp14,000 and some are under it.
Back again to openness, so we will keep our economy open. Economic openness. But again, we have to make other countries depend on us, we have to. Don’t just become a branch. This is what I see going wrong in Latin America, just being a branch. Many investors poured in, but [the countries] only became the branches. The economy is growing, but only as a branch. And, I see that these countries also don’t make products that other countries depend on, so they are not part of the global supply chain.
Let me give you an example, Taiwan. Why can Taiwan jump? This is just one example, they make chips. They only focus their strategy and be competitive on the product. And, all [countries] depend on this product. Only with one product, we have not talked about other products.
The same case for South Korea, I wonder why [the economy] skyrocketed. I continuously search for the reason and see that one of the reasons, this is only one of them, is by creating digital components making major companies in the US depend on and need them. I wonder, I often wonder why South Korea did that. I directly asked the President at that time, “Why?”
Like other countries that tend to follow the West, if we follow them, we will always be behind them. If we climb the ladder by following them, we will always be behind them. Although we have great power as I said earlier, we can’t do it. Moreover, if you start late and only follow them, we will be in the back. Remember this, they don’t want that [to happen]. When the two of us talk, I always ask related questions about why. And, we will not be able to surpass them until whenever.
Therefore, we need measures. I will just say one thing but later the health industry will do it too as well as other industries. This is on how to create a large ecosystem so that other countries depend on us. Because we have nickel, copper, bauxite, and tin. Our potential is enormous. Do we want to continue exporting raw materials?
Be careful, back in the VOC era, the trade alliance era, we know things such as forced labor and cultivation. In modern times, forced exports have emerged. Forced export, we are forced to export. Hey, this is our goods. Indeed, I told you that we lost yesterday. But do we immediately want to just stop? no. I said to the minister, “Appeal on nickel!”
Because the story has not ended yet and if we stop, the big ecosystem we dream of will not manifest, like the chips and digital components earlier. The big ecosystem because once again, nickel is number one; our reserves are number one; tin is number two; bauxite is number six; copper is number seven globally. We have everything.
In creating an EV battery ecosystem, we only lack lithium reserves, we don’t have them. Yesterday, I said to the Australian PM Albanese, ‘Australia has lithium, can we buy it?’ Australia said ‘Go ahead’. It turns out that some of us already have the mines there. This is strategic. We intervene so that the large ecosystem which we want becomes possible.
It is the same thing with graphite. We can produce our own synthetics now. That means it’s already done. The most difficult challenge is to integrate them as they are scattered in several different places. There is copper in Papua province; there is copper in Sumbawa island; there is nickel in Southeast Sulawesi province and other parts of Sulawesi island; there is bauxite in West Kalimantan and Riau Islands provinces. It is not easy to integrate these materials and create an ecosystem. This is what I seriously want to make possible so we can leapfrog toward another civilization. I am really serious about this.
As soon as this is done, I said to Coordinating Minister for Maritime Affairs and Investment and Minister of Investment, that there is no need to go anywhere to draw investment. They will come to us. Believe me. They will come to us to look for, to buy our EV battery.
So, I say that we are open [to investment]. I welcome you. Partner with the private sector and SOEs. So, don’t let us be left behind. This was the key. In Latin America, they were opened to investors but for years there is no technology transfer, so there is no dependency factor. This is what we want to build, only one ecosystem first. There are also still the following ecosystems. If it is created, believe me, I estimate that in 2026, 2027, we will see this leap. [The investors] will come in as in the future of the automotive industry, electric motorcycles and cars will replace maybe more than 50 percent of the existing market demand. This is what we have to seize.
As soon as it is created, I did the math yesterday, I calculated around 60 percent of electric cars, EV will depend on our EV battery, 60 percent of the world’s market share. This is our great strength later, just like the digital components and chips I mentioned earlier. For those who have the strength, please join so that technology transfer will occur. So, we can get the knowledge transfer. So, we just handle this, so don’t do small businesses again, small projects. Okay, the projects are big but for me they are small. It’s that kind of mindset. Report to me, “Sir, now.”
In the past, raw nickel exports were US$1.1 billion, 4-5 years ago. Now, it is US$20.8 billion. Yes, that’s great. But that’s not our goal, not yet. That’s not it, that’s just the first step, not our main goal, not there. Our main goal is to build a system, build a large ecosystem.
If this is done, we can integrate these. They will depend not only on electric cars, EVs, and electric motorcycles. Later on, if we now still buying chassis for a car, after this is done, everything is made domestically. The plane, the body, we will buy domestically. So, [investors] will come, I predict. Those from related industries will come, as I said earlier, such as those from the automotive industry, and the aircraft industry. They will come because we have the materials.
Therefore, I am also glad that in the last 30 months, our trade balance is always a surplus. The trade surplus is a first in our history. We have never experienced a surplus in our trade balance. But for 30 consecutive months, we continue to have a surplus, a continuous surplus. In fact, the figures for January and October are not small ones.
This is what causes us even in a demanding global economy, in a difficult global economy, if we don’t see the detail of what happened to Indonesia. The numbers are all there on how we are in a good shape. As the numbers are all there, we can read the numbers. So, if you are all still pessimistic, it is too much, too much.
Of course, if the large ecosystem has been built, we will create another large ecosystem. If the ecosystem is created, Minister of Finance, you will see a boost in matters related to taxes, be it taxes, royalties, dividends, export duties, and non-tax state revenues (PNBP). For sure, in 2026, 2027, we will see them jump very high. Even right now, it has started to show. The Minister of Finance likes to deal with tax matters so I will share it here. And, you, here, have a big share. You contribute to taxes, to income, to our state income.
So, we can see that in 2014 the metal industry only had Rp9.8 trillion. It has jumped to Rp37 trillion. On taxes, tax revenues, at the national level, in 2014, it was at 985, now it is at 1,448, an increase of 50 percent. But once again, it is a start not the end of the story, not yet. It has just started. I say that when the large ecosystem is created, the jump will be visible; the leap will be visible.
And, if there is an increase in state revenues, what does that mean? The budget for the Village Funds can be increased, what does that mean? The village community will also enjoy the ecosystem that we have built, it doesn’t stop there. Don’t be mistaken because, we have disbursed Rp468 trillion for the Village Funds for six years, meaning the circulation of money in the 74,800 villages that we have will also increase. There will be more and that will inevitably increase the welfare of the community. I think this is justice. You all pay taxes and the taxes are channeled back to the village, channeled back to vulnerable communities through social assistance. Where is it from? Yes, it was from taxes, from PNPB, from royalties, from dividends.
Once again, we don’t need to be discouraged, we don’t need to be afraid of losing the EU lawsuit. We lose but we don’t withdraw, because later on we want to do a second round. Because any developed country will want to maintain as a developed country. That is for sure. And also, they also won’t be willing that some of these developing countries will advance to become developed countries. Many are not willing. And, that’s humane, we don’t need to feel hurt, no. We should still try to achieve our vision so that we can become a developed country.
So, once again, to all of us, I have received recommendation for situations that are not easy right now. But once again, we all have to remain optimistic. We have to be full of vigilance, full of caution. I also ordered the ministers to be careful and prudent in making policies. Don’t make even the slightest mistake because the situation is not a normal one. It’s an unusual situation right now.
This concludes my speech on this good opportunity.
Wassalamu’alaikum warahmatullahi wabarakatuh.
[Showing video of New Capital of Nusantara]
I will add a little bit about the New Capital of Nusantara. In fact, in October I wanted to invite 30 who I see have the power to support the New Capital. But to my surprise, the first market survey was already over-subscribed up to 25 times. So, the capital authorities were also surprised. So, the core area is already full. So, we are preparing for the next area. So, I canceled the invitation. When this is finished, I will invite you again to support it because, indeed for the new capital, I want to focus on investment, not depending on the state budget.
And, I also need to say, we shouldn’t be pessimistic about a country this big. To build, more or less in dollars, it’s only US$29 billion. Why are we nervous? Approximately, it is Rp460 trillion if converted. We spend Rp1,700 trillion for COVID-19. The way of thinking that sometimes I don’t understand. We are urged to be pessimistic. No, I would like to ask you to be optimistic, to be confident because we have the materials as well as the potential.
I thank you. (FI/EP)