Remarks of President of the Republic of Indonesia at the Opening of the 2023 National Coordination Meeting of the Inflation Control at the State Palace, Jakarta, August 31, 2023
Assalamu’alaikum warahmatullahi wabarakatuh,
May prosperity be upon us all,
Greetings of virtue.
Honorable Chairperson of the Supreme Audit Agency;
Honorable Ministers of Indonesia Onward Cabinet;
Honorable Governor of the Central Bank of Indonesia;
Honorable Governors, Regents, and Mayors who are present,
Distinguished Ladies and Gentlemen,
First and foremost, I would like to express my heartfelt gratitude to the Inflation Control Team, both at the central and regional levels, as well as to the governors, regents, and mayors. We are aware that inflation has been well managed at 3.08 percent in July 2023. This is an excellent figure, as we have been able to control the prices of goods and services. If we compare this to other countries, Argentina has an inflation rate of 113 percent, which means economic growth collapsed. Turkey is at 47 percent, just imagine, 47 percent; India is at 7.4 percent, the European Union (EU) at 5.3 percent, and the United States at 3.2 percent, while we are at 3.08 percent.
So, inflation is crucial. It’s pointless to have, for example, a 5-percent economic growth if the inflation is at 9 percent; it’s a deficit. In most countries, inflation control is usually done through the central bank, like we do with Bank Indonesia, primarily through interest rate hikes and exchange rate adjustments, most countries implement these policies. But we have a combination, we have monetary and fiscal policies, as well as direct field checks.
So, if any of you are graduates of Harvard, Stanford, or the University of Pennsylvania, there’s no such thing as an inflation control team, that doesn’t exist, this is field knowledge. Because it’s funny, imagine, controlling inflation with interest rate hikes when the supply isn’t good, when there’s no stock, prices will inevitably rise. Controlling it with monetary policy, with interest rate hikes, but if the distribution of goods is disrupted because all the roads are damaged, it doesn’t make sense. So, this is a combination of monetary and fiscal policies, as well as direct field checks.
I’m glad that the prices I monitor in the market, this week I checked in Pekalongan, I checked again in Palu, all of them are declining. There’s only one issue because we still have a problem with rice due to a super El Nino. I’ve already called Prime Minister Hun Sen; I met Prime Minister Bangladesh yesterday and also met Prime Minister India Narendra Modi. Their rice prices do not rise, they’re not exporting, they’re keeping it for their domestic security.
So, I need to remind you, please pay close attention to the rice issue. This is our basic need; it should be carefully monitored. I do see a price increase, maybe 5-6 percent, but it still needs to be watched out for. And I’m happy that the rice stock at Bulog, which is usually 1.2 million tons, I asked Pak Budi Waseso, and the stock is now 1.6 million tons in the warehouses. Is that correct, Mr. Director? 1.6 million tons, which means we have an adequate stock. And there are still 400,000 tons in transit. These are used to control prices.
I would also like to announce that starting from early September, food aid in the form of rice will be distributed as quickly as possible. Each beneficiary family will receive 10 kilograms of rice. This is somewhat like a market operation. So, every month, 210,000 tons will be distributed. Every month, for three months: September, October, November, food aid in the form of rice will continue to be given to 21.3 million beneficiaries, which is substantial.
Please also check, as we have been distributing rice to the public. If prices continue to rise, I also request that Bulog, Governors, Regents, and Mayors use their budgets to intervene in the market. With this, we hope that our inflation will be well-controlled and gradually decrease. The target set by Pak Menko and the Governor of BI is 2.5 percent plus or minus 1 percent next year. This is what I hope for, so we must not let our inflation rise again because it will burden the people.
And to understand the impact of the super El Nino, extreme drought is predicted to continue until early 2024. The FAO rice price index rose by 129.7 percent in July. Nineteen countries are restricting the export of food products, and these 19 countries are all restricting their exports of meat, rice, oil, corn, sugar, flour, everything, to save their own people. So, once again, I request, especially to regents and governors who have agricultural land, to pay close attention to increasing productivity. When every country is limiting its exports, it is the country’s own efforts that can save it. We are not different, we each need to work hard to save our people, sinceasking for help, I mean not asking for help, buying rice or wheat from countries that have stopped their exports is no longer possible.
And, in Indonesia, rice inflation in July was indeed 6.4 percent. This is what we need to be cautious about. I always check the data on paper, and if prices rise, I go to the field, I check the markets. If it’s true, what I do is thoroughly cross-check the data, cross-check the field. So, I also request that all members of the inflation control team, both at the central and regional levels, also check directly like this.
Here are the 15 provinces that are still above the national average, even though they are already below 5 percent, I will read them out: Maluku 4.2 percent, East Java 4.1 percent, West Kalimantan 4 percent, Yogyakarta 4 percent, West Papua 3.9 percent, East Nusa Tenggara 3.8 percent, North Maluku 3.7 percent, South Kalimantan 3.6 percent. It’s already good, but it’s not exactly what we want; keep pressing, it’s already below 5 percent.
The highest regencies and cities are Merauke 5.2 percent, Manokwari 5 percent, Timika 4.9 percent, Luwu 4.7 percent, Waingapu 4.5 percent, Surabaya 4.4 percent, Pontianak 4.3 percent, Ambon 4.3 percent, Cirebon 4.1 percent, Banjarmasin 4 percent. These are the areas that need attention. Although, once again, I still say thank you because it’s already below 5 percent.
So, in the short term, integration of stock data, regional food balance must be closely managed, this is important. This kind of data needs to be integrated so that decision-makers have a solid guidance, which is data. Coordination between regions with excess supply and those with shortages should also be immediate. So, I entrust you not to prioritize the ego of each region because we are a united country. Where there’s excess supply, connect it with those that are lacking, pay for it too, not for free. Supply, this is short, supply that, this is short, find out which one has more, inform openly. So, when this happens, data integration, field integration, I believe our supply will improve.
Continuously check stock availability, continuously monitor food prices, oversee the distribution system and routes, and keep monitoring. If there are damaged roads, governors should fix them immediately, regents should fix them, mayors, because that’s all your duty. If it’s broken, if you really can’t do it, raise your hand, say, I’ll check it on the ground later. Check the field, it’s true, okay, it’s really prepared, the local budget is heavy, the road is really damaged, some are 15 years old, some are 20 years old, it’s already damaged, sir. Okay, because it’s already allocated by Minister of Finance, how much, Bu? It’s already allocated by Minister of Finance, 34 trillion rupiahs. But don’t use the regional budget for something else, while the road remains in damaged condition.
Also, please note, increase food reserves in the region; there should be reserves. So, if something happens, there’s no need to contact Jakarta. Our deliveries also take time, this is a very large country, the regions must move first.
“Sir, but this needs assistance, Sir, within a month we have to…” Okay, but don’t ask for help immediately to central government. There must be food reserves in the region, they must exist. And make immediate coordination and find solutions if there are problems. Like what happened in Papua yesterday, we checked, there was absolutely no stock. Because there are no food reserves, we have to deliver from Jakarta. But it can’t be like that, each region must have its own food reserves. And it’s not expensive, it’s not expensive, the things needed should be stored as reserves, even if Bulog has reserves, having our own reserves is not a problem. These can be stored in Bulog’s warehouses as well. So, decision-making policies are in the hands of all of you, the governors, regents, mayors, you decide on your own, because Bulog’s decisions are here.
And optimize regional fiscal policies to control inflation. Once again, inflation is the key, the key. Economic growth is the key, these two things are very important. All countries now concentrate only on these two things, they concentrate on these two things.
And for the long term, I request strengthening agricultural infrastructure. If every year the problem with inflation is always chili, always bird’s eye chili, always red chili, chicken meat, that’s the problem to solve. Chicken meat, going back and forth every year with continuous problems. Find investors, build farms in provinces or regions, all of you. There’s a problem with bird’s eye chili, this is always a problem every year, these items, bird’s eye chili, red chili, it always goes there. Growing bird’s eye chili, red chili is very easy. Teaching people to grow them is also very easy, why isn’t it done? Chicken meat is also very easy, creating community poultry farming is very easy. If you want to attract investors, go ahead, but I suggest that community poultry farming will be faster and cheaper.
I think that’s what I wanted to convey on this good occasion. Once again, I would like to express my utmost gratitude to the inflation control team, both at the central and regional levels, to the governors, regents, and mayors who have worked together with all of us in controlling inflation.
Wassalamu’alaikum warahmatullahi wabarakatuh.