Remarks of President of the Republic of Indonesia at the Opening of the 18th Muhammadiyah Youth Congress, in Balikpapan City, East Kalimantan Province, February 23, 2023
Bismillahirrahmanirrahim.
Assalamu’alaikum warahmatullahi wabarakatuh.
Asyhadu alla ilaaha illallah wahdahu laa syarikalah wa asyhadu anna muhammadan abduhu warasuluh, alladzi la nabiya ba’da, amma ba’du. [Introduction in Islamic way]
Distinguished the Fifth President of the Republic of Indonesia Ibu Prof. Dr. Hajah Megawati Soekarnoputri;
Distinguished General Chairperson of Muhammadiyah Central Executive Board Bapak Prof. Dr. Haedar Nashir and all ranks of Muhammadiyah Central Executive Board;
Distinguished Ministers of the Indonesia Onward Cabinet that I cannot mention one by one, Commander of the Indonesian National Defense Forces (TNI), Chief of the Indonesian National Police along with Chiefs of Staff in attendance;
Distinguished Governor of East Kalimantan Province and the Deputy Governor as well as Mayor of Balikpapan and Governor of Central Java;
Distinguished Chairperson of Muhammadiyah Youth Bapak Sunanto, aka Cak Nanto. I just figured out that Cak Nanto is mixed-race from Madura and Solo. He did not just say it in front of me, right? Because many people were like, “Sir, I am a resident of Solo too, Sir”. I will have further conversations with him regarding his lineage;
Distinguished all Chairpersons of Muhammadiyah throughout Indonesia in attendance;
Ladies and Gentlemen, Esteemed Guests.
I have high hopes that this 18th Congress will make big steps as well as design a big agenda. Why? First, since Muhammadiyah is well-known, a big brand, it is a pioneer of Islamic reforms in Indonesia. Second, youth population at the moment is growing larger.
Indonesia’s current demographic structure is dominated by younger generation. In 2023, the total population is expected to reach 280 million, including 66.3 million young people aged 15 to 30 years. The demographic bonus will be crucial for the country to jump forward to become an equitable, prosperous, and advanced country. If we do not manage this demographic bonus properly, it will burden us all. Therefore, the development of human resources is essential.
I noticed that South Korea, Taiwan, and Japan could transform into developed countries, while other countries in Latin America region have not transformed yet since 1950-1960 and they remain developing countries. I noticed the details of the cause. It turns out that they made products produced by their human resources which made other countries dependent on them. Hence, countries in Latin America will remain developing countries regardless of many natural resources they have. We do not expect that. We are now a developing country, but having the desire to become a developed country is mandatory. One way or another. We have to.
For Taiwan and South Korea. Why could they transform into developed countries? Because they produce goods that make other countries dependent on, including large companies in other countries, be it in America or Europe. South Korea has digital components that all countries and companies need. Taiwan produces chips that all countries and all large companies need and dependent on.
To that end, we must also produce goods that make other countries are dependent on since all raw materials are in Indonesia. As I often say, batteries for electric vehicles (EV) will become a large ecosystem. The country has a great potential to be a producer of electric vehicles since we have nickel, copper, tin, and bauxite. Indonesia is home to all materials crucial for producing electric vehicle batteries.
We only need to integrate nickel in Sulawesi copper in Sumbawa and Papua, tin in Bangka Belitung, and bauxite in West Kalimantan and Riau Islands into EV batteries and even build a more extensive ecosystem for the production of electric vehicles, which all countries will need in the future. That way, we will increase our added value multiple times. We always export raw materials since the Dutch East India Company (VOC) came decades or even hundreds of years ago, making zero-added value for our country.
Let me take an example. We stopped exporting nickel in 2020. Previously, we exported nickel with a value of Rp17 trillion a year. When we make the components for the cathode, the precursor, and steel, by 2022 our exports have already reached Rp450 trillion. It increased from Rp17 trillion to Rp450 trillion.
But someone said, “Sir, it will be large companies and foreign companies who receive the profit.” Listen, This country cannot make production alone regardless we have state-owned enterprises. Hence, private sectors are also our assets. When they produce, the value increases from Rp17 trillion to Rp450 trillion. The state will receive added value multiple times from taxes, employee taxes, royalties, non-tax state revenues, export duties, and other royalties if we also own shares at Freeport, for example. We will receive all of these. These are the sources of state revenues, the state income, which will be allocated to the regions, village funds, and social assistance. Once we build a large ecosystem and produce something, we can take it. That is a grand concept. Do not think like, “Sir, that is large companies’ profit.” No, it does not work that way. As I said earlier, we get the income from taxes, non-tax state revenue and export duties.
Let me take bauxite as an example. Indonesia was among top three exporters of bauxite ore. We ranked third in exporters of the raw material for bauxite. What did we export? Soil and rock mixture. We just exported them. The world’s number three. We also ranked 31st among exporters of solar panels, while the materials are all here. China ranked 18th among exporters of bauxite ore, yet it ranked first among solar panel exporters.
That means that we have a lot of goods, including 90 percent of our bauxite that is exported to China and it is now the world’s number one exporter. Shall we continue? Should we keep doing this?
We have imposed a ban on nickel exports in 2020 and plan to ban raw bauxite in the middle of this year. The thing is, we got sued by the World Trade Organization in favor of the European Union. That is the answer we got. If we get sued and we backed down, turn to the right and admit defeat, do not expect our country will transform into a developed country. Getting sued and getting lost in a lawsuit despite reliable lawyers we hire. Last year, we were sued by the EU and we lost. Just fight for it. We continue to file an appeal. We do not know yet whether we win or lose. But once we backed down, stop expecting our country to transform into a developed country.
For bauxite, we will impose a ban on raw bauxite later in June. We may get sued again. There must be someone who will sue us. We must defend it. If we lose, just keep moving forward. Do not lose hope. Have faith. This industry will create enormous employment opportunities. It is huge. After we ban nickel, bauxite, copper, and tin, like it or not big companies and big countries will invest in our country.
Let me tell you when I met the European Union, Indonesia was not close-minded. We are open-minded. But do not force us to export raw materials. We do not want to do it anymore. If you want to produce cathodes, precursors, and solar panels, please come to Indonesia, we are open to cooperation. What are we lacking? You can work with companies in Indonesia, you can work with Indonesian SOEs, and you can also set up your own company in Indonesia which should be fine. However, do note that your industry and your factory must be in Indonesia, not in Europe. That way, we will get a very big benefit. Great job opportunities for our people. That is the goal.
Currently, there will be many industrial opportunities if we carry out downstreaming. Raw nickel can be processed into an EV battery and increase added value by 67 folds. Raw bauxite can be processed into solar panels and increase added value by 194 folds. We cannot export raw materials and only receive one added value, while we can receive more added value by 194.
Processing raw copper into electro motor can increase added value by 77 folds. Processing raw tin into printed circuit board electro components can increase added value by 69 folds. Taking natural gas as fertilizer. Do not export it only in the form of natural gas since the added value can increase by four folds, not to mention marine and plantation sectors. Should we keep exporting raw materials? No, we should not. Stop. Our people will have many job opportunities for this.
Regarding the Nusantara Capital. Let me tell you something. Indonesia is a big country. A big country. America has New York and Washington DC, Australia has Melbourne and Sydney, then why does not Indonesia have Jakarta and Nusantara?
However, the main reason is equity. Ladies and gentlemen, you can imagine that our country has 17,000 islands, but an island called Java Island has an economic GDP of 58 percent. It is Java Island. How about the rest of the 16,999 islands? 58 percent are all in Java, while 56 percent of Indonesia’s population live in Java. How densely populated Java Island is. Therefore, we need equitable development. It will be Indonesia-centric instead of Java-centric.
I also need to remind you that the relocation to the Nusantara Capital is none of my ideas. The idea emerged since Bung Karno era in the ’60s. Bung Karno was about to move the capital city of Jakarta to Kalimantan, namely in Palangkaraya. Hence, we study it again which part of the province is the best area for the capital.
The most important thing, we do not just move the ministry buildings. That is not the point. It is not the physical building that we want to move. We want to move a new work culture and a new mindset into this capital. We will build the systems from the start and prepare the human resources from the start as well. To that end, we hope later this new capital will truly be a capital that other countries do not have.
Obviously, this is not a year or two-year job. It will probably be completed, inshallah, in 15 or 20 years. However, we must have the courage to start. Jakarta’s traffic itself is already very congested. Regardless, we will continue to improve Jakarta to become a city of business, city of tourism, city of the economy, while the Nusantara Capital will become a city of government.
That concludes my remarks on this auspicious occasion. And by saying bismillahirrahmanirrahim, this afternoon I officially open the 18th Muhammadiyah Youth Congress in 2023.
I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.
(RIF/MMB)