Remarks of President of the Republic of Indonesia at the 2024 Kompas100 CEO Forum, at the Garuda Palace, Nusantara Capital (IKN), East Kalimantan Province, October 11, 2024
Bismillahirrahmanirrahim,
Assalamu’alaikum warahmatullahi wabarakatuh.
Good afternoon,
May prosperity be upon us all.
Om swastiastu.
Namo Buddhaya.
Greetings of Virtue.
Distinguished Speaker of the People’s Consultative Assembly (MPR) Ahmad Muzani;
Distinguished Ministers of the Indonesia Onward Cabinet who are in attendance. There are so many that I cannot mention them all individually, as it could take more than an hour.
The Indonesian National Defense Forces (TNI) Commander, the National Police Chief, and Governor of East Kalimantan;
Distinguished CEO of Kompas Gramedia, Mr. Lilik Oetama, and Editor-in-Chief of Kompas, Mr. Sutta;
President Director of state-owned electricity company PLN, Mr. Darmawan Prasodjo, along with the CEOs and issuers from Kompas100;
Ladies and Gentlemen,
Esteemed Guests, whom I cannot mention each of you individually.
I remember that a year ago we gathered here for the Kompas CEO Forum, which took place in the middle of a eucalyptus forest. Now, we are in the Garuda Palace, in this room that is being used for a press conference for the first time. If it used to be hot, now it’s a bit cooler. In the past, many people asked, ‘Can this Nusantara Capital, this IKN, really be developed? Can it truly be built?’ Now, as we stand here in the Garuda Palace, we realize we took photos together in front of the State Palace. The plan was to take pictures at the State Palace with me and then come here together, but since I missed it, there are no photos with me. But that’s alright; we’ll take pictures here later. There’s a special area that not everyone can access, and I’ll unlock it for us so we can take photos there.
I said, ‘What does that mean?’ It means we must let time speak, because building a capital city like Nusantara does take time. It’s a process that requires not just one, two, or three years; it could take ten, fifteen, or even twenty years to develop into a thriving ecosystem and a great capital city for our nation, Indonesia.
Many say that after August 17th, the offices will not be ready and housing is still under construction. However, from this vantage point, you can see everything clearly; this is the highest place to view our capital city. And indeed, this is the best room.
Ladies and Gentlemen,
Let’s take a moment to look back and appreciate the view. Once again, I emphasize that everything takes time and involves a process. Building a capital city for a large nation like ours is no small task.
Going back ten years, I remember when we implemented the fuel subsidy cut. We knew that prices would rise as a result. At that time, my approval rating was 72 percent, but after the fuel price increase, it dropped to 43 percent. I calculated the risks; it was a decision we had carefully planned and measured. I chose to take that risk. Although my approval dropped from 72 to 43 percent, it created a larger fiscal space for us, around Rp170 trillion at that time. From there, we began building what we now call infrastructure.
For the past ten years, we’ve made significant progress in our budget, starting with village roads. People often focus on toll roads, but what we’ve built in village roads over the last decade amounts to 366,000 kilometers. Many express disbelief, asking, ‘Really, Sir? That long 366,000 kilometers?’ Let’s consider the number of villages in Indonesia: there are 74,800 villages. If we have 366,000 kilometers of roads, that averages out to only about five kilometers per village, or even four. In my view, that’s actually insufficient. We should have at least twice or three times that amount. These production roads are crucial for our farmers and plantation owners.
We have also constructed 6,800 reservoirs and 14,700 village markets. Why are village markets necessary? Because there needs to be a place for local products to be sold. Additionally, we’ve built 46,000 new integrated health posts that didn’t exist before.
Now, let’s talk about the major roads, toll roads. Currently, we have approximately had 2,433 kilometers of toll roads. If we look back, from 1978 until ten years ago, only about 780 kilometers were built. That’s more than 40 years for just 780 kilometers. In contrast, China now has 48,000 kilometers of toll roads, so we still have a long way to go. Additionally, we’ve constructed 26 new airports and 25 new seaports, along with 164 repairs to existing ports.
We’re also focusing on mass transportation due to the complexities in Jakarta and Jabodetabek, and possibly Bandung. We’ve begun building the MRT, which is already operational from Lebak Bulus to HI, with plans to extend from HI to Kota and eventually to Ancol. The east-west line is still in the works. We’ve also constructed the LRT, which currently runs from the center of Jakarta to Cibubur and Bekasi, with further expansions planned. In addition, the fast train from Jakarta to Bandung is only 148 kilometers long, despite being in development for years. In contrast, China has approximately 28,000 kilometers of fast trains, while we only have 148 kilometers. This highlights how much our infrastructure still lags that of the countries I mentioned earlier.
We have built 53 new dams with irrigation networks of 1.2 million hectares which in the end can reduce logistics costs from 24 percent to the last calculation of approximately 14 percent, thus increasing our competitiveness. And, also reducing the number of underdeveloped villages, from previously 47 thousand to 10,400.
Infrastructure development has noticeably improved our global competitiveness ranking, rising from 42nd in 2015 to 27th today. Additionally, our global innovation ranking has increased from 97 to 54. These figures demonstrate the tangible results of our efforts, which will enhance our competitiveness. It’s important for all of you, as informed individuals, to recognize these outcomes and understand how they contribute to our overall progress.
It is indeed time for our nation to consolidate. We must come together, as Mr. Lilik mentioned earlier, because the world is facing challenges, and many countries are experiencing uncertainty. Growth is projected to be around 2.7-2.8 percent next year. We should be grateful that our average economic growth remains above 5 percent. These are the aspects we need to appreciate. We often forget to express gratitude and fail to compare our situation with that of other countries.
What we need to continuously promote are positive and optimistic thoughts. Unfortunately, negativity and pessimism tend to attract more attention. When you give a speech or presentation, if you share pessimistic views, the applause can be quite loud. Similarly, negative comments often receive enthusiastic responses. However, when you present optimistic perspectives or positive data, you may hear more scepticism like ‘oh well, it is not going to happen’.
We have now entered the Asian century, and we are right in the midst of it. It’s estimated that three countries will emerge as new economic powers: China, India, and Indonesia. However, we must approach this with caution; the path ahead is not easy. Currently, our nominal GDP stands at approximately US$1.4 trillion, specifically US$1.427 trillion. Our GDP per capita has reached US$5,060. If we accelerate our efforts, especially the growth target set by President-elect Mr. Prabowo Subianto, aiming for 8 percent, our GDP per capita could rise to over US$8,000 in the next five years. Looking ahead, we might see it reach around US$11,000 to US$12,000 in the following five years. In ten years, estimates from international institutions suggest it could exceed US$23,000, potentially by 2045.
But once again, reaching these goals is not easy. It requires courage to make decisions, along with thorough and accurate calculations to ensure those decisions are sound. I believe that Retired General Prabowo Subianto is capable of guiding us toward achieving the numbers I’ve mentioned earlier.
Just wait until Monday, a week from now, when the ministers will be inaugurated. If you want to know who they are, ask Mr. Ahmad Muzani. Do not ask me, because people tend to react negatively. Am I intervening? No, I also don’t want to interfere with matters of prerogative rights. It’s the same for me. I prefer not to get involved. If I’m asked, I’ll answer. If I’m not asked, I won’t respond. For example, if someone asks, ‘Sir, what do you think about this, Mr. Andre Rosiade?’ I’ll give my answer. If I’m not asked, I won’t say anything. Even after a two-and-a-half-hour dinner yesterday, if I wasn’t asked, I wouldn’t have said anything. I don’t want my prerogative rights to be interfered with by anyone. That right is given to the people and then transferred to me during the election.
I have often emphasized that to achieve the figures I mentioned earlier, we must fully commit to downstreaming. We need to focus on this completely and not allow raw materials to be exported abroad. It doesn’t matter who gets involved, be it state-owned enterprises, the private sector, or foreign partners. Everyone is welcome to participate, but it must be done domestically. We shouldn’t be exporting in the form of concentrates, as that deprives us of job opportunities and added value.
Pardon me, Mr. Tony Wenas, but Freeport now has a smelter with a capacity of 3 million tons of copper concentrate in Gresik, correct? My question is, for over 50 years, where has that concentrate been going? But not Mr. Tony. We’re talking about 3 million tons of copper concentrate, which also contains gold. My estimate, though I often visit is that approximately 40 to 50 tons of gold are transported annually. Please, no applause. Just multiply 50 tons by the current price per gram in rupiah. How much is that? Since there hasn’t been a smelter, we haven’t been able to determine the total. But now, Freeport Indonesia has the capacity for that. We’ll find out later this year, as full production started in January, right, Mr. Tony? By December next year, we’ll see how many tons will be produced. Just for fun, I asked down there, and the figures in rupiah are enormous. I once converted it directly into rupiah, and I felt overwhelmed. But that’s alright; we are grateful that we’ve taken over 51 percent of Freeport and will soon increase that share.
This means that Freeport is no longer owned by an American company. It is now owned by Indonesia, specifically by MIND ID. Acquiring this stake wasn’t easy, going from 9 percent to 51 percent was a significant challenge. Just yesterday, our team of four included three ministers and one deputy minister, one of whom was Mr. Budi Gunadi Sadikin. What I’m particularly pleased about is that we made the purchase when the price was low at US$3.9 billion. Now, what’s the market value, Mr. Tony? Is it around US$24 billion? It keeps climbing, even reaching US$34 billion. This means that what we bought three years ago has already been justified; this year it’s officially paid off, right, Mr. Tony? We didn’t use our own funds for this purchase, which is a testament to our strategic thinking. The question is, why didn’t we do this 50 years ago? We hope to increase our stake further, but negotiations are still very challenging.
If we execute our plans effectively, step by step, I believe that China, India, and Indonesia will truly enter a golden age, especially for our country, Indonesia.
For example, as I’ve often mentioned, nickel exports before downstreaming were valued at US$2.9 billion per year, primarily in raw materials. After we halted those exports, the figure rose to US$34.4 billion in 2023. That’s a significant increase. Think about how many thousands of jobs could be created from that alone. Just consider copper. Who knows how many more job opportunities could arise from that? We’ve also seen similar developments with tin and bauxite. And let’s not forget about coal products and agricultural exports. For items like coffee, patchouli, and pepper, we must avoid exporting them in their raw form; we need to add value domestically.
Our coffee cultivation spans 1.2 million hectares, and I believe we can double that. Cocoa covers 1.4 million hectares, pepper 172 thousand hectares, and patchouli 12 thousand hectares. All of these areas have the potential for expansion and downstreaming. However, our coffee productivity is currently quite low, averaging only 2.3 tons per hectare. In contrast, Vietnam, which once learned from us, now produces an impressive 9 tons per hectare.
We need to examine the details, what causes these discrepancies, who is responsible, and what the underlying issues are. In our work, we must approach this comprehensively; if we don’t delve into the specifics, we won’t fully understand the situation. If we don’t visit the fields, analyze the data, and grasp the problems, we won’t be able to find effective solutions.
Lastly, as a country, we need to cultivate a strong national image, much like a company must build good brand value. I’m sure you’re familiar with the concepts of book value and market value; companies constantly navigate these. The market value of a company can sometimes exceed its book value due to trust and appeal, which helps shape its image and influences perception.
The same principle applies to our country. What we are building over the next ten years is aimed at fostering global trust. This trust is essential for creating a positive perception of Indonesia on the world stage.
Take Switzerland as an example. It has successfully cultivated its image as a neutral country. The impact of this is significant, as Switzerland is viewed as a safe haven by investors and international institutions, many of which choose to establish their headquarters there. Similarly, when we see a product labeled ‘Made in Japan’ or ‘Made in Germany,’ we often associate it with durability, longevity, and high quality, traits that command a higher price.
Therefore, building a strong national image is crucial. However, it requires time, a process, and consistent collaboration between the Government, the private sector, and the community. I see that the distinguished guests here today represent competent and esteemed companies, and we hope they can help foster a positive image for our country, Indonesia.
We are working together to create a positive national image, which is essential for building trust in our country. Once that trust is established, people will be eager to invest in Indonesia and set up their offices here. We are already seeing this happen; for instance, FIFA has chosen to establish its office in Jakarta. Why not in other countries? Similarly, FIBA has also set up its basketball office here. This reflects the trust we are building. Without that trust, it becomes challenging to gain confidence from the global community.
That concludes my remarks. Let’s work together to build this country, and we fully support the new government under the leadership of General TNI Ret. Prabowo Subianto, who will be inaugurated on October 20. I thank you.
Thank you, I conclude here.
Wassalamu’alaikum warahmatullahi wabarakatuh.
Om santi santi santi om.
Namo buddhaya.
Greetings of Virtue.
(RIF/MUR)