Remarks of President of the Republic of Indonesia at the Opening Inauguration of the 2021 National Coordination Meeting and Investment Service Award, at Ballroom of the Ritz-Carlton Hotel at Pacific Place, SCBD, 24 November 2021, Special Capital Region of Jakarta
Assalamu’alaikum warahmatullahi wabarakatuh,
May peace be upon us all.
Greetings of Virtue.
Distinguished Coordinating Ministers, Ministers of the Indonesia Onward Cabinet;
Distinguished Governors, Regents, Mayors, Heads of provincial, regency, and municipal One-Stop Integrated Service (PTSP) Agency, and all Administrators of the Special Economic Zone (KEK), Free Trade and Free Port Zones;
Ladies and Gentlemen.
It has been almost two years. In March 2022, it will be two years that we are experiencing pandemic. Not only Indonesia, but also the world is experiencing pandemic whose impact is absolutely beyond our expectation; it impacts everything. Many countries are facing energy crisis that we did not expect before. Many countries are experiencing container shortage which caused disruptions to the distribution of goods. Many countries are also seeing higher inflation which scares all countries. And many countries are recently experiencing an increase in producer price which is likely to impact everything given that if the producer price increases, the consumer price will also increase.
The impacts of the pandemic are beyond our expectations. Another impact is tapering off so that the US Federal Reserve will wait (to issue policy) which impacts everything. This is what I have often delivered; global uncertainties which all Regional Leaders, Agency Heads must understand, anticipate, and prepare the anticipation.
The complexity of the problems is intertwined. One impacts another and more so that the economy in almost all countries drops. Once again, the complexity of the problems and uncertainties that are calculated sometimes did not match.
To that end, we have to work hard to prepare everything. And there is only one key; we must be able to tackle COVID-19. It is the only key. That’s why I often firmly said to Governors, Regents, Mayors. If we could not control COVID-19, there would be no economic growth. Please be cautious. I would like to remind all of you that in Europe and the US, the case is surging; after the first wave, second wave, third wave comes the fourth wave.
All of us want the number of COVID-19 cases that is under control not to rise anymore. Thus, yesterday I hold a meeting [the Limited Meeting] to discuss that ahead of the Christmas and New Year, together we can control [COVID-19] so that our economy will rebuild.
Therefore, the investment serves as an “anchor” of the economic recovery considering the State Budget (APBN) of all countries is in deficit. All countries are also worried about that. If the situation returns to normal, it will cause a shock. Once again, the impact of the pandemic affects everything, every sector.
Tens of thousands of trillions of dollar are hold to return the deficit to normal. It is worrying but there is still no calculation about that.
Thus, investment serves as an “anchor” of economic recovery. If we only too focus on the State Budget, we will experience deficit. Even though I know that Minister of Finance is prudent to manage the State Budget. Therefore, those aside from the State Budget must be driven. Investment is the key.
I am pleased to learn that there is ministry, institution, provincial and regional governments that won awards on investment both investment realization and investment permit service. The award on investment permit service goes to Central Java province while the award on investment realization goes to West Java province. What does it mean? If we provide best service, it is not sure that the investors will come. Let alone, what if we do not provide our best service. Do you agree with me? If we provide best service, it is not sure that the investors will invest, what if we do not provide our best service. Therefore, we must start to leave the old patterns [of the public service], outdated things [related to investment services].
Give our best service to investors including small investors. Small businesses are also investors. Medium investors must be served properly. Also big investors must be served properly. Once again, small investors, small businesses must be served properly. Give free business permits, deliver it to their homes. It means service. We have to give service like that to them.
Governors, Regents, Mayors must set a target to the PTSP. For the example, this year 10,000 MSMEs will be given free business permits. If they have business permits, it will be easier for them to access to financial agencies/banks because this is a condition of the permit in addition to other conditions. It will be easier for them. I would like to reiterate that small businesses are also investors. Do not you think that investors must be from abroad, must be a big one. Once again, small businesses are also investors.
If there is investment, there will be more money circulations. If there are foreign investors, the money will be brought here. The money circulation will also increase. It will have an increase in community’s purchasing power, community consumption, and economic growth. It will affect all those sectors.
If anyone asks me, “What kind of investment is really needed now?” I will answer, the investments that have high added value. We can no longer export raw materials. We have to ask the investors to manufacture raw materials into finished goods or if they do not want, at least ask them to manufacture the raw materials into half finished goods. This is what I repeatedly said that such economic transformation is what we want.
To that end, we stop exporting the raw material of nickel. Perhaps in the next year we will stop exporting the raw material of bauxite. We are currently calculating it. In the next two year we will stop exporting the raw material of copper. And also we will stop exporting the raw material of tin. We will continue to do this considering the added value in these sectors is huge. I would like to give you an example; nickel. For years ago, we exported raw material of nickel approximately amounting to USD1.1 billion. This year, I have estimated that the value will reach USD20 billion. From Rp15 trillion, it will reach Rp280 trillion. That is what we called as added value.
The State will certainly receive royalties, non-tax revenue (BNBP), export duty, VAT. All regions will also receive an impact of large money circulation, as previously stated by Minister of Investment. In North Maluku, check out how much is the economic growth? Please check out in Morowali. Also in Central Kalimantan province. It will definitely have an impact on economic growth, people’s income, community’s purchasing power, everything will be affected.
Once again, our economy that was previously based on raw materials from our natural resources will be shifted step by step. There must be a transition, one by one will be stopped. Transition to half-finished goods, finished goods. Transition to an industry that encourages added value for finished goods and half-finished goods. It will be more proper if we can integrate each other, regional governments provide best services for investors, the Central Government will integrate it. What does integration mean? If there is copper, in another place there is nickel or steel iron, how we can integrate them into lithium batteries, so that we can manufacture electric vehicles. The added value can be multiplied. All kinds of goods will be more and more in four and five years ahead. It will occur in the next four or five years.
For example, the finished goods could be electric vehicles. It could be semi-conductors. It could be syringes in which global demands require more than ten billion of syringes. We have all raw materials. For example, we have the raw material of semi-conductor. Do not export the raw materials. If we have that kind of industries [that focus on manufacturing finished goods], there will be transfer of knowledge, transfer of technology so that our industry will accelerate to a higher level.
However, I have to say firmly to all of you that the deficit of our State Budget is Rp548 trillion. As much as Rp642 trillion of the State Budget is transferred to provinces, regencies, municipalities. The money is in the regional budget (APBD). The provincial APBD, regency APBD, and municipal APBD. It means that we have Rp642 trillion. We have not expensed other people’s money, the investor’s money. We expense our own money, that is, Rp642 trillion.
I told all of you firmly. Earlier in the morning, I asked Minister of Finance, how much the budget in the bank? It is the end of November. It is only one more month [ahead of 2022]. The budget amount did not decrease, it increased. I reminded all of you in October 2021 that the budget was Rp170 trillion. Today it has increased to Rp226 trillion. I remind all of you. How come we attract investors to invest while our own money is not used?
Please, expense our own budget. Realize it. Once the situation like this, “Is there no regional budget? Is there no State Budget?”, then all of you have to find investors. That’s how it works. The budget is still Rp226 trillion. It is a huge number. Expense it, realize it immediately. After that, we will talk about investors. “Realize the budget” It will affect everything.
Once again, I would like to remind all ministries, regional governments to put aside your “sectoral egos”. We all must be on the same page. All must have the same aspirations to advance the regions, municipalities, regencies, provinces, and our country, Indonesia.
That concludes my speech on this auspicious occasion. By saying bismillahirrahmanirrahim, I officially inaugurate the 2021 National Coordination Meeting on Investment.
I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh. (AP/MUR)