Speech by The President of The Republic of Indonesia - Indonesia and China Business Forum Gathering
SPEECH BY THE PRESIDENT OF THE REPUBLIC OF INDONESIA
INDONESIA AND CHINA BUSINESS FORUM GATHERING
SHANGHAI, THE PEOPLE’S REPUBLIC OF CHINA
SEPTEMBER 4, 2016
Honourable Madame Gao Yan, Vice Minister of Commerce of the People’s Republic of China,
Honourable Mr. See Xuang Hwee, Vice Mayor of Shanghai,
Dear Ministers, Government Officials and CEOs,
Distinguished Guests,
Ladies and Gentlemen,
Good morning,
It is wonderful for me to be back in China.
When I first took office in October of 2014, I decided very quickly that I have to come as soon as possible to the People’s Republic of China. Therefore, I decided that the 22nd APEC Summit in Beijing in November 2014 would be part of my first international trade.
Three years ago, before I took office, China was the number 13 largest investor in Indonesia. I am happy to report that, since my visit to Beijing two years ago, China has moved from number 13 to become the number 3 largest investor in Indonesia.
We have made very good progress together. But of course, we want to do more.
Ladies and Gentlemen,
2016 is shaping up to be another challenging year. Eight years after the global financial crisis, the world economy remained soft.
Global trade is at its weakest since World War II. Last year, global exports declined by 13% compared to the year before.
We are seeing teror attacks, big and small around the world.
Arguably, the politics in many regions of the world are the most unpredictable since the beginning of this century.
However, in Indonesia, we do not share this pessimism. In view, this challenges reflex an opportunity: an opportunity to rebuild our economies, an opportunity to make our economies more sustainable, and opportunity to upgrade our economies to provide higher-quality jobs for our people.
Yes, the world is changing. And we too must change.
In the world, there have been mistakes and failures. We must admit our mistakes and fix our failures.
In Indonesia, same as in most countries around the world, we must reform our economy, we must reform our societies.
Indonesia is affected by the decline in commodities’ prices. Our economy started slowing down in 2012. By the time I became President in October 2014, we were experiencing our third consecutive year of slowing economy growth.
To counter this economic slowdown, upon taking office, I immediately launched the largest infrastructure development programme in the history of our country.
One year later, in September of 2015, we launched a major deregulation campaign to reduce the burden of rules, regulations, permits and licenses on our industry and business.
Since then, we have issued 13 packages of policy reforms. They cover a wide-range of policy areas, from lowering energy cost for industry to opening more sectors to international investment, to reducing the transit time of goods at our major ports, and many other areas and sectors.
The latest policy package number 13, issued last week, reduce the permits and licenses needed for building low-cost housing.
By early this year, we began to see the results of our efforts. Our GDP growth rate for the fourth quarter of last year shows a clear uptake from 4.9% to 5.08%.
Then, in the first quarter of this year, our GDP growth rate fell down again to 4.91%.
But, in the second quarter of this year, it jumped back above the 5% mark, to 5.18%.
In short, we have managed to arrest our economic downturn, and engineered an economic rebound to above the 5% per year level of economic growth. While many economies around the world are slowing down, Indonesia’s economy is now speeding up.
One month ago, I decided to reshuffle my cabinet. This reshuffle brought two political parties into our government-ruling coalition.
With these two political parties joining, our ruling coalition now commands a 68% majority in parliament. With this parliamentary majority, we have achieved a high degree of political stability, maybe the highest level of political stability of any country in Southeast Asia today.
This political stability and strong political base give us the power to pursue even more ambitious economic reform and economic modernization.
Where will we take our economy in the coming years? I believe that we will see a major increase in manufacturing in Indonesia.
We are steadily lowering the cost of doing business in Indonesia.
Inflation, which used to be always above 8%, this year has fallen to below 4%.
As a result, interest rates, which have always been double digit in Indonesia, are on track to fall toward single digit in the near future.
One of our policy packages created a nation-wide formula for the labour minimum-wage. Increases in the minimum wage are now limited to a maximum of GDP growth plus inflation. We believe this makes salary increases more predictable, which will make it more attractive for employers to hire employees.
Another sector of the economy, which I believe is ready to develop rapidly now, is our tourism sector.
You all know Bali, our famous island paradise. Your life is not yet complete if you have not yet been to Bali.
But Indonesia has thousands of beautiful spots like Bali. For example, Raja Ampat in West Papua, Mandalika in Lombok and Labuan Bajo in East Nusa Tenggara.
You may want to buy property that soon before the price goes up.
Like China 30 years ago, Indonesia is now also entering a period of demographic dividend. 53% of our population is currently under the age of 30.
Our dependency ratio has been decreasing from around 86 in 1971 to around 49 in 2015. This period of demographic dividend will continue until 2035.
Our working-age population will peak in 2036. This means, more than 100 million of our people will become middle-class consumers.
To fully support the growth in this manufacturing and tourism sectors, we have created special economic zones, and are focusing on boosting our industrial estates. We have officially launched eight special economic zones, and are working to launch six more.
Our investment-coordinating board, the BKPM, has launched a three-our licensing process for investment in factories that are built inside the industrial estates. Permits and licenses for factories inside the industrial estates, which used to take weeks and even months, can know be finished within three hours.
Ladies and Gentlemen,
Even though the world economy is facing great challenges today, this doesn’t change the fundamental fact that the 21st century is still the Pacific century. East Asia will remain the most dynamic region of the world.
The destiny of the world economy will be decided mostly by Asia, and especially by East Asia. The rise of the middle classes in China, India and Southeast Asia represent a once-in-a-generation opportunity for business and government.
China and Indonesia are historic partners in this Pacific century.
China is in the north of East Asia, and Indonesia is in the south of East Asia. Together, we will anchor the economic opportunity of our life time.
I look forward to welcoming you to Indonesia. And rest assured that, when you travel, trade and invest in Indonesia, I will be there to guard and to protect.
Thank you. Xie xie.
Zai jian.
*****
Bureau for Press, Media and Information Affairs
Secretariat of the President