Remarks of President of the Republic of Indonesia at the 2022 National Coordination Meeting on Investment, The Ritz-Carlton Jakarta, Special Capital Region of Jakarta, November 30, 2022
Assalamu’alaikum warahmatullahi wabarakatuh,
May peace be upon us all,
Greetings of virtue.
Ladies and Gentlemen,
We must share the same sentiment and sense. We must agree that the current situation is not easy at all. It is a very difficult situation for all countries, for all countries. Big countries, developed countries… no matter how developed they are, they are all in a very, very, very difficult position.
Inflation, negative economic growth, energy crisis, food crisis, lack of fertilizer, financial crisis. Those are the issues that all countries are facing. Therefore, in this very difficult situation, everyone must be careful.
Do take caution in establishing policies. Do not make a mistake. If you make a mistake, the risks are substantial because the situation is truly not normal. Do take caution in establishing fiscal and monetary policies. I always mention it because the situation is indeed not normal.
The key [to overcoming the crisis] is to work harder. We cannot work normally in an abnormal situation. We cannot. And next year in 2023, it will be much more difficult for all countries. It has been forecast that there will be global recession in the beginning of next year. Once again, we must share the same sentiment on this.
For that reason, all countries fight over investment, over investors because all countries want capital inflow. They all want it because if there is no capital inflow, money will not circulate, there will be no growth. All countries fight over investment. Once again, all countries fight over investors.
Therefore, none of us should make it complicated. I refuse to hear that some people complicate [investment process]. The Central Government, regional governments, provincial governments, regency governments, and city governments must not disturb the process because we have earned their trust. We have earned it. Now, the implementation of the policies we have established must not diminish the trust that we have earned. We must not lose it due to mistreatment or because we mistreat the fund invested in our country as the competition in gaining investment is tough.
We always observe which countries receive the most investments and the reason behind it. We study it through our economic intelligence. Why do investors invest more money in other countries and not here? We learned that they have additional policies, additional incentives, tax holidays. Investors are given better treatments. We learn everything. However, if there is still disturbance in the implementation, the policies that we have designed will all be ruined.
Second, on downstreaming. I have mentioned it over and over again that we want to achieve added value from downstreaming process. We should stop exporting raw materials. Stop it. Once we receive investment, develop [the facilities], have a partnership with external parties, and establish cooperation between the Central Government and regional governments or between Jakarta and other regions, we can achieve added value.
Let me give you an example. I have mentioned this example repeatedly and I will continue to do it. In the case of nickel, seven years ago, five years ago, four years ago, we exported raw nickel and the value in a year was only US$1.1 billion. How much is US$1.1 [billion]? Rp19-20 trillion a year because we exported raw materials. We exported raw materials.
After we have smelters, nickel industry and its downstreaming industry, [the value of] our [nickel] export in 2021 was US$20.8 billion. It is more than Rp300 trillion. It skyrocketed from Rp20 trillion to over Rp300 trillion. The added value is 18 times higher. What about the others? Do we want to keep exporting raw materials? No.
Once again, although we lost at the WTO, we lost in nickel trade dispute. The European Union filed a lawsuit to the WTO and we lost. It is okay to lose. I told the minister to file an appeal.
The next step is to carry on downstreaming process for bauxite. It means bauxite as raw material must be processed in Indonesia so that we can create added value. Afterward, other commodities, for instance, coffee, should not be exported as raw material. We have been doing it for decades. We must stop it. Find investors. Get investment, so we can have added value.
The impact will be the same as that in the nickel case, from Rp20 trillion to over Rp300 trillion. Because of this, our trade balance has recorded a surplus for 29 months after it had been recording a negative result, recording a deficit for decades. It has been recording a surplus for 29 months in a row. This is our goal.
If other countries file a lawsuit, it is their right to sue because they are disturbed. I checked why the European Union filed a lawsuit. Apparently, there are many nickel industries there. If nickel is processed here, there will be unemployment, factories will be closed, industries will be closed over there. However, we want to develop, to advance too. We want our country to be a developed country. We want to create jobs. If we are scared to be sued and we back down, we will never be a developed country. Continue, I told the Minister. “Continue.” “Sir, what about…
Continue. Do not stop. Do not stop at nickel. Continue developing other downstreaming industries.
Third, on Online Single Submission (OSS) at all levels, including the regency, city, province, and central levels. Do pay extra attention to the platform. Improve it so that the process is fast. If we say five minutes, it should be five minutes. If we say one hour, it should be one hour. Do not say one hour when in fact it can take six months. We will not be trusted. Please do improve it. There are still many to be improved on the platform.
Fourth, on targets. The Rp900 trillion target in 2021 has been achieved. The target for 2022 is Rp1,200 trillion. Minister of Investment stated that it will certainly be achieved, but we will see at the end of the year. Do not say it will be achieved then apologize if it is not. You cannot apologize for not meeting a target because it will affect growth. It will affect economic growth.
If the investment does not reach Rp1,200 [trillion], our economic growth will decrease as well. Be careful. Investment is key. And in the third quarter of this year, our economic growth reached 5.72 [percent]. Be careful. Do not let our economic growth drop due to a decrease in investment.
And I am happy that based on the last information I received, there are more investments outside Java island, 53 percent. Is it correct, Minister, 53 percent? 53 percent. Back then, it was 70:30 [percent]. Now the ratio has decreased. The amount of investment outside Java island is bigger. I suppose it is good news. It means that the infrastructure we built outside Java island has truly made impact on investment, on economic growth outside Java.
Let me give you an example of downstreaming and infrastructure in North Maluku province. Anyone from North Maluku? Be careful with North Maluku. Be careful. I am warning you because the economic growth in North Maluku is 27 percent. It is the highest in the world. There is no other region in the world where the economic growth reaches 27 percent. And another good thing is that when I visited a market in Ternate, I checked the market, then I checked the inflation rate at [central bank] Bank Indonesia (BI), it was only 3.3 percent. Why am I warning you? To continue to maintain this achievement. Improve it. If I praise you, you will be overjoyed and negligent. Before you know it, it will drop to 5 percent. Be careful. 27 percent. No other places in the world have seen an economic growth that big. Why? Because it has new industries, there is downstreaming. This is an example.
Furthermore, I received survey results. A survey was conducted in all provinces. Which has the happiest people? North Maluku. Its economic growth is 27 percent. It would be bizarre if the people were unhappy. But be careful. I remind you, be careful. It is harder to maintain, it is much harder to improve. If there are other derivatives that can enter the industries in North Maluku, the added value can increase much more, so once again, be careful. I remind you to be careful.
Finally, on regional budgets. We should discuss it as there are governors, regents, mayors here. Let me remind you. We are getting investments so there will be more money circulated. However, our own money, which Minister of Finance transferred to the regions, is in fact unused. This morning, I asked the Minister about the amount of money that regencies, cities, and provinces have in the bank that has not been used. In the previous years, at this time of the year, there would be Rp210-220 [trillion]. This morning, we checked and the amount in the bank is still Rp278 trillion.
We are getting investment to gain capital inflow. If the money we already own is not used, it will be useless. Rp278 is a huge amount. It is very big. It is huge. If the realization is made, if the budget is used immediately, it will affect regional economic growth. Be careful.
I have ordered Minister of Home Affairs to check one by one, whether any issue occurs. The situation is very difficult, but the money remains deposited in the bank. It is not used. Rp278 trillion is huge.
I order you to immediately spend it. Indeed, the realization is usually made at the end of the year, in December, but it is different now. If we compare it with the previous years, the amount deposited this year is much higher. The cost of money is high. There is a price paid for depositing the money. Last year at the end of October, the amount was Rp226 trillion, but now it is Rp278 trillion.
And let me inform you about the national budget spending realization. It has reached 76 percent. The regional spending realization is still 62 percent. It is already December. Tomorrow is December. Please be cautious. It means that we have to do our best to gain capital inflow. We gain it through investment, but our budget in our account is not allocated to investment. We have to be cautious. It is a big mistake. Once again, it is a big mistake.
That concludes my statement on this auspicious occasion and by saying bismillahirrahmanirrahim, this morning I officially open the 2022 National Coordination Meeting on Investment.
I thank you.
Wassalamualaikum warahmatullahi wabarakatuh.