Remarks of President of the Republic of Indonesia at the 2021 National Working Meeting of Ministry of Trade, Thursday, 4 March 2021 At State Palace, Jakarta
Date 4 Maret 2021
Assalamu’alaikum warahmatullahi wabarakatuh,
May prosperity be upon us all,
Greetings of virtue.
Distinguished Cabinet Ministers,
Distinguished Chairperson of Commission VI of the House of Representatives,
Distinguished Echelon I Officials and all personnel of Ministry of Trade, as well as overseas trade representatives,
Distinguished Heads of the Provincial, Regency and City Trade Offices,
Distinguished Chairperson of KADIN (Indonesian Chamber of Commerce and Industry) and Chairpersons of Business Organizations,
Ladies and Gentlemen.
We are aware that it has been one year since COVID-19 pandemic hit the world. Our country, Indonesia, is not an exception. The pandemic has affected everything. Amid this situation and when the world economy is replete with uncertainty, we should be grateful that our foreign trade and exports have fared relatively well.
Minister of Trade has reported that our trade balance in 2020 recorded a surplus of US$ 21.7 billion. In the past, we never had a surplus.
However, due to the COVID-19 pandemic during this year, our economy has been severely disrupted. We are aware that in 2020 our economic growth contracted to minus 2.19. And, as a result of the COVID-19 pandemic this year, our economy has to grapple with a difficult situation.
To that end, all of us must exert our best efforts to expedite the recovery of the national economy. The target in this year’s State Budget for economic growth is to reach approximately 5 percent. It is no easy task since the last year’s growth was minus 2.19
In this regard, let us to work hard. And I want that trade policy make a major contribution to the strategic agenda for the recovery of our national economy. We have to work in new ways as everything has changed, leaving behind the old ways. Trade policies must ensure the availability of basic necessities at affordable prices. I always remind you that in this country, price stability and the availability of supply must be guaranteed.
To revive the economy disrupted by the crisis, we have to work in a more detailed manner in deciding which sectors are disrupted and what to do with them, and whether they need incentives or stimulus.
The next factor is attracting new investments. The key to growth, to our economic growth is investment. It is impossible for us to drastically increase our State Budget. It means that the key is in investment and creating as many job opportunities as possible. This is what the people have been waiting for. There are currently almost 10 million unemployed people in our country due to the pandemic and also the emergence of new workforce.
Ladies and Gentlemen,
First, e-commerce is a must and it must be developed and be managed as well as possible. The Government must create a fair and beneficial e-commerce ecosystem. Digital transformation must still maintain the sovereignty and independence of the nation. And Indonesia must not fall victim to unfair digital trade. Other countries have experienced it and we must not fall victim to unfair digital trade.
Digital trade must also increase the use of local content (TKDN). I always stress the importance of local content and local products. I always reiterate that. We must encourage domestic production that benefits for everyone, especially small businesses, medium enterprises, and household consumers. We must not increase imports. I am happy that our import has dropped. But do not let the decrease is in capital goods or raw materials. The decrease in consumer goods is good. I always carefully scan the figures of Customs every day.
Once again, we are not a nation that favors protectionism because history has proven that protectionism is detrimental, but we must not fall victim to unfair practices from the world’s digital giants. Digital transformation is a win-win solution for all parties.
E-commerce must encourage the development of our MSMEs. We have seen the benefit. Digital power must be utilized to link supply from MSMEs in Indonesia with both the national market and the global market. Digital commerce must empower our MSMEs.
When small businesses get the opportunity, they will achieve more. Now you can look at chips products run by a household business exported to Korea and Japan. It is small business but if we work hard for them, it will not be that difficult. We need only slight changes, including packaging modification and brand improvement, and the product will be ready for export. And the problem will usually emerge when it comes to capacity. This is our duty to encourage banks to be willing to inject capital into our MSMEs so that they can increase the capacity.
In the event that the e-commerce practices treat the MSMEs unfairly, we must regulate it immediately and we must resolve the problem immediately. Last week I told Minister of Trade that there is something wrong with our digital trade that eliminates MSMEs. They should be warned off. We have to defend, protect, and empower our MSMEs to advance. This is one of the most important tasks of Ministry of Trade.
Second, Ministry of Trade must have the right policies and strategies to develop market for our national products, including by supporting the “Proud of Indonesian Products” program. Shopping centers and malls in Jakarta and in the regions must continue to be pushed to provide space for Indonesian products, especially MSMEs products. Do not let the front room of strategic locations to be filled with foreign brands. This must start to be shifted to non-strategic places. The strategic places must be available for local brands.
Branding is also important so that the people will love Indonesian products more than they love foreign products. Indonesia has a population of more than 270 million people. We should be the most loyal consumers of our own products because 270 million people is a large number, a large market. Campaign to love our own products, Indonesian products, must continue. Campaign to love domestic products and avoid using products from abroad must continue so that our people really become loyal consumers, once again, for Indonesian products.
Ladies and Gentlemen,
Export market must also receive a serious attention. Therefore, I order that non-traditional markets be expanded. For years, we have always been sending our products to the European Union or the United States. Do not pay attention only to the same export market. Today, new markets are growing and we need to pay attention to them seriously. Many countries have growing economies whose growth is more than 5 percent, in Africa, in South Asia, in Eastern Europe, and in other countries.
Fourth, I demand that MSMEs receive assistance so that they are able to export the products. I have said that we need more MSMEs to become exporters in large numbers. Ninety percent of exporters are MSMEs; yet, their export contribution is only 13 percent. It means that we need to increase the capacity.
To that end, last year I reminded Minister of Trade that the Export Supporting Board was revived (to) help MSMEs improve their production, help MSMEs improve the designs, and help MSMEs improve their packaging, so that the quality of the product is better. The measures taken must involve other ministries / agencies and other institutions to boost the competitiveness of our MSMEs in the global market.
Fifth, speeding up the completion of negotiations with potential countries is a priority agenda because in this kind of situation we need new export markets. We have finalized the IA-CEPA (Indonesia-Australia Comprehensive Economic Partnership Agreement) with Australia and with Korea. I order the Minister to immediately finalize the agreement with the EU (European Union) and other countries.
The implementation of the 23 signed bilateral and regional trade agreements must also be fully utilized by business actors. I will give an example. We already have IA-CEPA with Australia. Look at the opportunities that we have here. I think the biggest opportunity is automotive. Learn what the market is like and what kind of consumers it is so that we can really open up market in Australia. And surely we need to support the potential MSME products. We must support and encourage them to increase export value and product diversification to our trading partner countries.
For manufacturing sectors that provide employment for a large number of workers, such as automotive, electronics, textiles, chemicals and pharmaceuticals, as well as food and beverages, stimulus and export facilities must be provided. There must be an incentive to expand the market, especially to non-traditional countries by making the most of trade cooperation and optimizing the performance of our trade representatives in foreign countries. We have trade attaches. We have the ITPC (Indonesian Trade Promotion Center). They must do something.
Sixth, we must continue to ensure the availability of basic needs across the country at stable and affordable prices. We must continue to promote price equality in rural areas. I also need to remind you that the fasting month of Ramadan is only 40 days away and a month later we will have Eid-al Fitr. We must be ready and take anticipatory measures. Even though we will celebrate the events in a simple manner, once again, the availability of goods and stable prices must be guaranteed.
Finally, before I conclude my remarks, let me underscore that 2021 is a year of recovery. The growth target in the State Budget, which I mentioned earlier, must be achieved. Once again, 2021 is a year of recovery that must be built on enthusiasm and optimism. To that end, I specifically order all personnel of Ministry of Trade to not only work normatively, but also to come up with creative and innovative breakthroughs.
That concludes my remarks on this auspicious occasion.
And by saying bismillahirrahmanirrahim, I officially open the 2021 Ministry of Trade National Working Meeting.
I thank you.
Wassalamualaikum warahmatullahi wabarakatuh. (RI/MEP)