Remarks of President of the Republic of Indonesia at the Opening of the XXII Congress of the Indonesian Economic Scholars Association (ISEI) and National Seminar in Surakarta, Central Java Province, September 19, 2024

Bismillahirrahmanirrahim.
Assalamuálaikum warahmatullahi wabarakatuh.
Good afternoon,
Peace be upon us all.
Om swastiastu,
Namo buddhaya.
Greetings of virtue.

Honorable Minister of State Secretary, Deputy Minister of State-owned Enterprises;
Honorable Chief of the Indonesian National Police;
Honorable Governor of Bank Indonesia (BI) and Chairperson of ISEI;
Honorable Governor of Central Java, Mayor of Solo;
Ladies and Gentlemen, the entire ISEI family.

I can see that ISEI has plenty of money because the most active branch alone was given a prize of Rp200 million. I only see it from this angle and know that you are rich.

Ladies and Gentlemen,
Today, the world is facing turmoil, uncertainty, and challenges that are not easy. All countries are experiencing it, including us. In fact, if we look at developed countries, many have fallen into recession. The latest one, the UK for example, has gone into recession. And last time we checked, 96 countries have become IMF patients. I believe this is a very horrifying number. Therefore, we must focus on managing our economy.

If you ask me which direction to focus on, I’d say that we must focus on the labor market now and in the future. This is because, in the future, there will be too few employment opportunities for too many people in the workforce. Too few jobs for too many people. This is what we must avoid. So, I don’t think we should get too carried away by the global situation, even though we should follow it. We should not be too carried away by the global economic scenario, although we must always look at the numbers and do careful calculations.

Because we know that in the 2030s, we will experience a demographic bonus. It can be a force, but it can also be a burden. This is our biggest challenge that will determine whether we become a developed country or not. So once again, this demographic bonus requires the opening of as many employment opportunities as possible.

However, we are currently facing a very, very tough challenge in opening up employment opportunities. All countries are facing this challenge. The first challenge is the global economic slowdown. We know that in 2023, the World Bank estimated that the global economy would only grow by 2.7 [percent]. In 2024, the figure is estimated at 2.6 [percent]. Next year, the World Bank predicted a slight increase to 2.7 [percent]. However, this is still far from the expected [figures] targeted by all countries. And as stated by Mr. Chairperson, we can grow to approximately 5.1 [percent]. We should be grateful for this because the global economy is predicted to only grow by 2.6-2.7 [percent].

And, if we also look at the Central Banks in almost all countries, they are tightening their monetary policy to prevent inflation from escalating. What does it mean? If the monetary policy is tightened, it means that the industry will definitely decrease its production, automatically. Global trade will also decrease its capacity. So, our first challenge is the global economic slowdown.

Second, increased automation in various work sectors. Everything is now starting to head there, to automation of everything. We started with mechanical automation, and now we have AI, analytical automation, and every day new things emerge. And if we read, by 2025, we will lose 85 million jobs. This is not a small number. We are obligated to create employment opportunities, but in fact, in 2025, we will lose 85 million jobs due to the rise of automation in various sectors

Third, the first one is the global economic slowdown, the second one is the increase in automation, the third one is the gig economy. Be careful with this, the gig economy, the part-time economy. If not managed carefully, this will become a trend. Companies prefer independent workers; companies prefer freelancers; companies prefer short-term contracts to reduce the risk of the ongoing global uncertainty. We can see this trend heading that way. The workers can work here, or they can work in other countries. So once again, employment opportunities are shrinking and decreasing.

Therefore, I hope that ISEI, which has already delivered the study, will provide a tactical design, a tactical plan, a tactical and detailed strategy. If we have them, we’ll know where to go. If we are interrupted here, we’ll know where we should go. We need these tactical details, not some macro plans that are difficult to implement in dire situations. And in my opinion, as mentioned earlier by the Governor of BI, downstreaming is the key.

Take a look at one, the nickel business. I often talk about nickel because it is indeed a success in boosting the added value of nickel. From raw materials (nickel ore) into NPI (nickel pig iron), into nickel matte, then into stainless steel. And then into the derivatives, including forks, spoons, syringes, and hundreds of other derivatives that are currently still in process, but at least now we have made it to stainless steel. Then, there is nickel ore to smelters, HPAL, to precursors, to cathode, then to cell batteries. We made it happened and we have the industry. In the future, if the cell battery capacity is sufficient, currently only about 180,000 cars can be produced with our own cell battery. If the capacity increases to a million, we will have strong competitiveness against other countries.

So copper, after the nickel, we went to copper. After we stopped the nickel [ore export] in 2020, we also stopped the copper one about two years ago. Next week, there will be two large smelters with an investment of approximately Rp50-60 trillion in operation, namely [PT] Amman in Sumbawa and [PT] Freeport in Gresik. Please note that Freeport is no longer owned by the United States, because people still think so about Freeport. Freeport is Indonesian-owned, it is owned by MIND ID with 51 percent [of shares]. We used to hold only 9 percent, but now we hold  51 percent, and soon it will be 61 percent. We need to continue to acquire it. From what I see on the ground, copper becomes finished goods, copper foil, cables, car frames.

And, the third one is bauxite. We have started the downstreaming in bauxite, one in Bintan, then next week I will also inaugurate one in Mempawah, in West Kalimantan. So one more, it means there are two. Out of this, it will become… the one in Mempawah is a state-owned enterprise, the bauxite will be processed into aluminum, car wheels, airplane bodies, all of them.

Ladies and Gentlemen,
In a normal condition, in a normal world condition, it would not be possible for us to do this. It will definitely be intercepted by developed countries. That’s for sure. In fact, when I was about to acquire Freeport, many people whispered to me, “Sir, be careful Papua could be separated” “Sir, be careful, you could be overthrown” “Sir, be careful”. So, downstreaming is not an easy task, because Freeport has been operating for 55 years and has never wanted to build a smelter. Because in it is not only copper, there is another asset with a higher price, which is gold. And, when we have our own smelter in Gresik, we will know how many tons of gold each year have been lost from the Indonesian homeland for 50 years. I estimate that per year it might be around 40 to 50 tons, just an estimation, a guess. But later, when it’s in production, we will know exactly. Oh, it turns out that there are so many tons of gold per year. So, they were whispering to me earlier, because of the asset I mentioned earlier.

But Ladies and Gentlemen, I believe that ISEI can really design the plan and strategy. What I want is a labor-intensive downstreaming, such as on seaweed, which wasn’t well-managed. From here, we will have the derivatives, be it organic fertilizer, jelly, cosmetics, flour, and also airplane fuel, which can now be made from seaweed. We know that Indonesia has the second longest coastline in the world at 81,000 kilometers. It is a great potential, but it has to be well-designed, well-planned, well-strategized, so that we can get the results.

Another type of food, in my opinion, that should also be downstreamed is coffee. I have checked on how many hectares of coffee we have, 1.2 million hectares. I inspected on the ground on how much production per hectare we have, only approximately 2 tons per hectare, a little more than 2, 2.3-2.5 per hectare. Whereas in Vietnam, 1 hectare can produce 8 [tons], producing 8 to 9 tons per hectare. That is a huge gap. We lost to Vietnam although we started first. The demand is increasing; the price is increasing every year, but we never address it. Our RnD, our research is poor here.

And also on cacao, we have 1.4 million hectares of cacao. The industry is available, but the raw materials for cocoa are insufficient, so we actually import them, which is another big mistake. And there are many others, such as pepper, patchouli, whose derivatives will provide huge added value.

I just want to give an illustration, back to nickel earlier. In 2015, our nickel exports were US$3 billion in one year, meaning Rp45 trillion, Rp45 trillion. Then, after we stopped the export in 2021, we went from Rp45 trillion to Rp340 trillion. [In] 2022, the figure increased to Rp520 trillion and in 2023 the figure was Rp520 trillion, such a leap. Someone told me, “Sir, it’s the company that benefits, sir, what do the people get?” Don’t be mistaken, we collect taxes from there; corporate tax, employee tax, export duties, export tax, export duties, not to mention the PNBP, the non-tax state revenue. It is huge.

Let me give you an illustration for mineral and coal, not only nickel, but mineral and coal. In 2015, we received Rp29 trillion of non-tax state revenue. In 2023, we received Rp172 trillion of non-tax state revenue, from Rp29 [trillion] to Rp172 trillion. For the taxes, I haven’t gotten the details, but I’m sure it will also leap many times.

I believe that the inputs, designs, plans, and strategies formulated by ISEI in this congress are very important and will become a guideline for the Government in the future, not my Government anymore, but the future Government, because in a month I will retire. We truly hope to achieve the Golden Indonesia faster.

This concludes my remarks. And, by saying bismillahirrahmanirrahim, I hereby officially open the XXII Congress of the Indonesian Economic Scholars Association (ISEI) and the 2024 National Seminar.

Thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.

(FI/MMB)