Remarks of President of the Republic of Indonesia at the 2022 National Inflation Control Coordination Meeting, at the State Palace, Special Capital Region of Jakarta, August 18, 2022
Assalamu’alaikum warahmatullahi wabarakatuh,
May peace be upon us all,
Greetings of virtue.
Distinguished Coordinating Ministers, Ministers,
Distinguished Governor of Bank Indonesia,
Distinguished Governors, Regents, and Mayors, and all heads of regional governments attending the meeting in person as well as virtually.
I have reiterated multiple times that the situation we are facing is not an easy one. The world is facing a very tough situation. All countries are facing a very, very difficult situation. The COVID-19 pandemic has not yet ended and several countries currently have a high number of cases, then we have a war, food crisis, energy crisis, financial crisis. This is what I mean by a very difficult situation.
Therefore, we cannot conduct business as usual. We cannot do it anymore since the situation is not normal. We cannot carry out business as usual because indeed the situation is not normal. We cannot use the normal standards, the usual standards. It applies to ministers, governors, regents, and mayors. We cannot do business as usual. We cannot work based only on the macro situation. It will not work. Trust me. We must observe not only the macro situation but also micro situation more thoroughly. We must also study the figures and data because indeed the situation is not normal.
I want regents, mayors, governors to work together with the Regional Inflation Control Team (TPID) in the regions and the Central Inflation Control Team (TPIP). Ask what prices increase, what cause inflation in the regions. It can be rice, it can be shallots, it can be chilis. The Central Inflation Control Team must check which regions have abundant chili supplies or rice supplies. Distribute them. They must be distributed because this country is huge; 514 regencies/cities, 34… now 37 provinces with new autonomous regions. This is a big country.
I have been to Merauke. The head of regional government told me, “Pak, we have a lot of rice here, but no one buys it. The price is also affordable, Rp6,000, Pak.”
I checked and it was true that it costed Rp6,000. Meanwhile, other regions lacked rice supplies. Why did they not take it from Merauke whose rice was affordable? The problem is a high transportation cost.
Yesterday, during a meeting with Minister of Home Affairs, I mentioned that regarding transportation, contingency budgets must be used to cover costs of goods transportations. Use the available budgets. Use them. I have ordered Minister of Home Affairs to issue either a decree or a circular that states that contingency budgets can be used to overcome inflation in the regions. Use the budgets to cover transportation expenses, distribution costs. This is a field work that requires all TPIP-TPID to know which goods will become a problem since inflation is the specter that haunts all countries. The current problem of all countries is inflation.
Take a look now. Our inflation, as stated by Governor of [central bank] BI and Coordinating Minister of Economic Affairs, is at 4.94 [percent]. Look at other countries, theirs is already very high, above 5 [percent]. Some countries’ is already at 79 percent. European Union countries’ is already at 8.9 percent. The United States already hit 9.1 [percent], yesterday it dropped to 8.5 percent. It is not an easy problem and it haunts all countries.
However, I am certain that effective cooperation between provincial, regency, and city governments, governors, regents, mayors, TPID, and TPIP can reduce inflation to below 3 [percent] because we have the commodities.
I also heard complaints from the ground. “Pak, the prices of plane tickets are high.” I have acted on it. I have ordered Minister of Transportation to overcome this issue. I have also mentioned it to Garuda, Minister of State-Owned Enterprises to operate more planes so the prices can return to normal although it is not easy since the global avtur prices are also high.
Once again, the current global situation is not normal, so we must work in both macro and micro scales and know the figures in detail. Provincial governments must know the inflation rate of their respective region. If I ask regional governments about inflation rate, they must know the figure, whether it is high, normal, or low. Five provinces have seen an inflation rate of more than 5 [percent]; Jambi province must be careful as it is at 8.55 percent, West Sumatra province is at 8.01 percent, Bangka Belitung at 7.77 percent, Riau at 7.04 percent, Aceh at 6.97 percent. Please check thoroughly what caused it, so we can overcome it together and it can drop to below 5 [percent]. It would be great if it can fall to below 3 [percent].
We must be grateful that we can still control the prices of food, especially rice. The average price of rice is still a little more than Rp10,000. Take a look at other countries. Yesterday, I checked with embassies, the price of rice is Rp66,000 in Japan, Rp54,000 in South Korea, Rp53,000 in the United States, Rp26,000 in China. We need to maintain it.
We must also be grateful. Last week, we just received an award from the International Rice Research Institute for our food security system and rice self-sufficiency. We must maintain it and we must improve, so we do not stop at rice self-sufficiency. We must be able to export rice and contribute to overcoming food scarcity in several countries. It is horrible, the economy of 60 countries, according to international organizations, is in danger of collapse. If there is a crisis, it usually happens to 4-5 countries, but this time it has been forecasted that the economy of 60 countries will collapse and 345 million people in 82 countries will face acute food shortage and starvation.
This is why I said we cannot conduct business as usual. Why did I say it? Because the regional spending up to this day—only 39.3 percent of the regional budgets has been spent. Beware. Only Rp472 trillion although it is crucial to circulate money in the regions, [to boost] economic growth in the regions. The regional budgets should be spent so that [the money] circulates among the people. It is vital. I checked the regional budgets at the bank. I must check little things like this and I must know the exact amount of the regional budgets at the bank. It is Rp193 trillion. It is still very huge. It must be pushed to stimulate regional economic growth.
That concludes my statement on this auspicious occasion. Once again, we must all check the inflation rate because the inflation rate at 4.9 percent is still sustained by stable fuel prices. The prices of Pertalite, Pertamax, and Solar fuels, LPG, and electricity are not the actual prices, not the economic prices. Those are the prices that are subsidized by the Government and the subsidies this year amounted to Rp502 trillion. The amount is huge. This is what we must know. What for? To curb inflation at a low rate, but if it goes on for a long time, can the State Budget sustain it? It will be calculated by Minister of Finance.
That concludes my statement. Thank you. And by saying bismillahirrahmanirrahim, this morning I officially inaugurate the 2022 National Coordination Meeting on Inflation Control.
I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.