Remarks of President of the Republic of Indonesia at Academic Senate Open Session of the 46th Dies Natalis of Sebelas Maret University (UNS), at Ki Hadjar Dewantara Tower of Sebelas Maret University, Surakarta City, Central Java Province, March 11, 2022
Assalamu’alaikum warahmatullahi wabarakatuh,
May peace be upon us all,
Greetings of virtue.
Distinguished Ministers of the Indonesia Onward Cabinet;
Distinguished Governor of Central Java Province;
Distinguished Chair and Members of Board of Trustees of Sebelas Maret University (UNS);
Distinguished Rector and all ranks in UNS’ Rectorate;
Distinguished Chair and Members of Board of Professors of the UNS, academics,
Distinguished Ladies and Gentlemen.
First and foremost, I would like to wish the big family of UNS happy 46th anniversary and I also would like to express my gratitude for your significant contribution in the development and advancement of the community in Surakarta city, in Central Java province, and in Indonesia. By continuing to innovate and transform, I am confident that UNS will be more successful in executing its mandate to make contribution to achieve an advanced Indonesia that we aspire to be.
Distinguished Ladies and Gentlemen,
Earlier, Minister of Finance had told us about the current unfavorable situation, how hard it is to manage the State Budget (APBN), to manage finance in this extraordinary state. We are all aware of the latest global situation that is hard for all countries, not only ours. It’s hard, extremely hard.
We faced extreme disruption of the fourth industrial revolution; all countries found it as a challenge. We must also face disruption brought by the unprecedented pandemic. It added our burdens and all countries experienced it as well. Next, a war broke when we had not sorted things out yet. It shows how hard it is to manage the economy, as mentioned earlier by Minister of Finance. Thank God, we can do it. We successfully manage the financial sector and curb the COVID-19 pandemic if compared to other countries. What does it mean? There will be a more uncertain future for the world.
Two days ago, Chancellor of Germany Olaf Scholz and I in a phone call talked about many things including related to what I have mentioned earlier. Yesterday, I also talked with the Prime Minister of Japan Kishida about the same issues, the ongoing pandemic and war which make everything unpredictable. Things that are unprecedented have become reality. Energy scarcity is experienced by all countries, not to mention the war and increase in prices. In 2020, the price of oil stood at around US$60 per barrel. Today, the price reaches 115 (US$). The price in last week was 130 (US$), twofold from the earlier price. All countries increased selling price to the public, but we still hold to maintain the price. I asked Minister of Finance, “Until when we will keep the price stable?”. We will continue to do it. That is the energy scarcity.
In addition, a number of countries are experiencing food scarcity. Global food price continues to increase. The hike in wheat and soy prices affected us. Due to the ongoing war, the price of wheat sharply increased since 20 percent of wheat production is from the Ukraine and Russia. In detail, the price in Russia increased by 12 percent, in the USA it increased by 6.9 percent, in Turkey it increased by 55 percent. Thank God, in our country the price increased by only 3 (percent). However, can we continue to hold this much longer?
Shortage of shipping containers. Normally, we can find any containers we want regardless the sizes. But now, we short of containers because of the disruption. What is the consequence? The price increased by twofold, threefold, fourfold, and fivefold. What will it bring? Logistic prices also increase because of the high price of containers. It brings a domino effect and eventually increases inflation rate.
Please be prudent in managing the economy. If we only pay attention to macroeconomy and pay less attention to microeconomy, it will cause troubles. We must work in detail, otherwise we cannot solve the issues. We must be grateful that inflation rate in our country is still managed at 2.2 (percent). Let’s take a look at the rate in Turkey that reached 48.7 (percent), USA 7.5 percent from the previous under 1 percent. The situation happened worldwide. I guess the key is speed to change, to use the opportunities. That is what we’re going to do.
Therefore, stability is necessary. We can transform the economy. In this state, transforming economy will bring long-term benefits and opportunities for us. Let me reiterate once again that we have been exporting raw materials for too long, years, decades, and century. We have been exporting raw materials since the VOC [period] and we are still doing it up until now. Then, we will not get any added value.
Since 2020, I have ordered the ministers to stop exporting raw materials, gradually. First, we stopped exporting nickel as raw material. What will happen? Seven years ago, the export of nickel as raw materials stood at US$1-1.5 billion or around Rp15-20 trillion. When we stopped exporting it, industrial down streaming grew. Last year, we started exporting nickel as half-finished and finished products and generated US$20.8 billion. The value jumped from Rp15 trillion to Rp300 trillion.
That is only from one product, namely nickel. We also have bauxites that can be processed into alumina, copper, tin, gold, as well as agricultural commodities. If we dare to stop exporting raw materials, we can generate value as many as I have mentioned before, and more importantly to open job opportunities. Second, Minister of Finance can collect tax from it; the income tax (PPh), value-added tax (PPN), customs form export, and non-tax revenue (PNBP).
When we announced that we stopped exporting nickel [in the form of] raw materials, the European Union filed a lawsuit against us and the issue has not settled yet. It’s okay, I already ordered to stop exporting bauxite this year. And if we are going to be sued again, let it be. We have stopped [export of] bauxite, and a year later we will stop copper and tin. It is fine if they sue us again, we are not losing yet, we can lose or win. Nevertheless, we must have courage to do it. If we never try, we’ll never know the result, are we on the right side or not. However, I know that stopping it is the right thing to do. We know from the value which jumped from Rp15 trillion to Rp300 trillion.
What will happen if we stop exporting all raw materials? Investment in Indonesia will significantly increase. Capital inflow will enter the country which will generate high added value. Various products such as lithium battery, iVi battery, electric vehicle, sodium-ion, semiconductor will be manufactured in Indonesia if we stop exporting the raw materials.
During the G20 Summit in Italy, I told world leaders that Indonesia is not a cloistered country, we are open for other countries as long as manufacturing industry for our raw materials are not dominated by other countries. Bring half or all to be processed in Indonesia. You can cooperate with our State-Owned Enterprises or private companies. You can also do it alone as long as it is in Indonesia. We can no longer provide them raw materials since it will generate value added 14 to 20 times compared to the raw materials. They collect taxes from us, they open more jobs, but what we get? They warned us, reported us to the WTO. Let them do it.
Second, the second down streaming is green economy. We have potential in that sector. Therefore, we must promote it and we have huge potentials in green energy. We have 4,400 rivers for hydropower, geothermal that can generate 29,000 megawatts, wind power, solar energy, ocean tidal power, and ocean thermal energy. We will create domestic green products which have high value added.
To materialize it, what must we do? We must immediately prepare our human resources. Human resources development must deal with rapid and dynamic changes. I would like to remind the UNS that the University is a big ship. You must turn the ship slowly even though all we need is speed. If the ship is small, we can make a quick turn.
How many students you have? Four thousand. The university is considered a mother ship, huge ship. Please be careful. The ship can be either agile or not, depending on the captain. as I have mentioned earlier, all organizations, including higher education institutions and universities must be agile, quickly learn and to be adaptive in responding any changes, and to be updated. Please be careful because the world changes rapidly and the science develops so quickly.
I don’t quite follow the update. There is a new product which I am not familiar with and there is another new product. It happens over and over again. Once again, science develops so quickly and it must be followed by dynamic, fast education programs. Researches must also be adaptive to the challenges of our time. We are now racing against time.
Let’s say we only have two years to solve the issue of human resources. Can we change in only two years? If we cannot do it and make rapid changes, we will not be able to face the demographic bonus in 2030-2035.
I have calculated. Our Ministers and I have calculated. We only have the opportunity to change in the next two years considering the demographic bonus is projected to happen in 2030-2035. Digital talents must be prepared, we are racing with other countries toward the same goal. Digital talent is important. AI (Artificial Intelligence), cloud computing, digital design, digital marketing, blockchain, all of these are important. What are these things? Things that we must acquire in addition to human resources. I totally agree with Minister of Education on “Kampus Merdeka” (Independent Campus) where students can study anywhere, anytime, and with anyone; a campus that leads students to a right direction.
I am delighted that they can learn from the industry for one semester. It means industry is part of university. We have Matching Fund scheme which is financed by ministries. There is a target of inviting 10,000 practitioners from the industry to be parts of university. This will trigger changes.
Once again, if we don’t change in the next two years, it will be hard for us to face the period of 2030-2035. Thus, I remind that study programs at university maybe will only remain relevant for five years. Pay attention to the rapid changes in our age. Many programs have not changed for 20, 30 years. Programs that are relevant today may not be relevant next semester because of the rapid development and changes.
Closing one existing study program is hard. I knew from a number of universities that it is hard. I have yet to listen to the UNS. Opening a new study program is also hard, though I know it is the authority of university as a state-owned legal entity (BHMN). Right? The authority has been delegated, so you cannot tell the ministry is the one that hold responsible for that.
There are centers for study at universities. Now, we must work in details. Otherwise, we cannot understand the changes. I heard centers for study have not changed. We do not disband the old one and the old-fashioned one, and we also do not establish a new center. These are the challenges for us in order to prepare Indonesia’s human resources.
I conclude this remarks on this auspicious occasion. Once again, happy 46th anniversary.
I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.