Istana Merdeka, Jakarta, 24-3-2009

Opening Remarks at The Roundtable Discussion With The International Chambers of Commerce in Indonesia

 

OPENING REMARKS
HE DR. SUSILO BAMBANG YUDHOYONO
PRESIDENT OF THE REPUBLIC OF INDONESIA
ON THE OCCASION
OF THE ROUNDTABLE DISCUSSION
WITH
THE INTERNATIONAL CHAMBERS OF COMMERCE IN INDONESIA
AT ISTANA MERDEKA
24 March 2009



<i>Bismillahirrahmanirrahim,
Assalamu’alaikum warahmatullahi wabarakatuh,</i>
Peace be upon us,
Ministers,
Distinguished Business Leaders,
The Chairman of Kadin,

Let me begin by thanking all of our friends in the International Chambers of Commerce for joining our discussions today. And my special thanks to Kadin, Pak Hidayat and Pak John Prasetyo, for helping to organize this important meeting, to which I have been very much looking forward.

I am delighted that in the midst of a busy political season, we have found the time to hold this meeting. But this only underlines the importance that we attach to our partnership with you. We want you to be part of our prosperity, and you have always been and we want you to continue to build that prosperity for our mutual benefit.

It is therefore only appropriate for me to begin by thanking all of you for your contribution, your trust and confidence in Indonesia. You have been with us for a long time. You have shared our gain and our pain. You know us better than many because of your extensive experience and knowledge of Indonesia. You not only work in Indonesia, you also know what works for Indonesia. And I appreciate that you have actively spread the good word about our country, our potentials, our promise, our prospects and our hopes. For that, we are very grateful.

We meet here today under difficult circumstances - for the global economy, for the national economy, for business, and for our people. We are all bracing for hard times ahead, and we must all tighten up our belts at least for the short term.

I will not highlight all our economic policy, because I am sure you all are very knowledgeable with how we have responded to the crisis, otherwise, you would not be here.

The bottom line, is that from the start of the global financial crisis, I have set out 7 priorities for our economic policy :
1. tackle unemployment;
2. control inflation;
3. keep the real economy moving;
4. maintain our people''s purchasing power;
5. protect the poor;
6. maintain food and energy security;
7. aim for an economic growth rate of at least 4.5%. It is my objective, it is our endeavour to achieve that kind of labor economic growth.

I strongly believe that the remedy to this global crisis lies at three levels: the national level, the regional level, and the global level.

When I was invited to attend the G-8 Plus 8 Conference that was held in Hokkaido, Japan and right after that I also attended the Asia Europe Summit held in Beijing, October last year and I also attended the G-20 Summit in Washington DC and followed by APEC Summit in Lima, Peru, I appointed out my views that actually this global crisis must be tackle collectively as I have said at the national level, individual countries must do act part to overcome the domestic situation.

At regional level, we have to collaborate our effort by example ASEAN, ASEAN Plus 3 to share and to work together how to best deal with the situation. And at the global level such as the G-20 Summit, how international community can also do something to stabilize the financial market to keep the real economy moving and later on how to fix the global economic architecture including global financial order.

As you know our friends that Indonesia is doing real hard to manage the situation and I took very good lesson from what happening in Indonesia 10 years ago, when Indonesia was hardly hit by the crisis. I good take good lesson at that time, there is no real coordination, synergy, lack of leadership probably because of the political crisis that occured in Indonesia, lack of confidence there was a capital outflow and finally made our economy collapse. And from the beginning I think you follow very well what my government is doing so far since about 6 months ago, we gathered, I mean not only the government but also the central bank, the business sectors, the economist were working together to overcome this crisis. I set the policy, I give the direction to be used as a collective effort in overcoming the problem.

And I am pleased to tell you that eventhough we are still facing great challenges ahead because the crisis is not over yet, but to a certain degree, we are able to manage the situation. We will continue to do so with your supports, with your partnership in dealing with our economic situation here in Indonesia.

That is why the next G-20 Summit will be very critical. I am honored to take part in that important London Summit on April 1st and 2nd. I do hope that the London Summit will produce concrete proposals to revive the world economy, including a clear plan to address the issue of lingering toxic assets in banks.

Without clean up in the banking system, I think eventhough all countries have adopted counter cyclical effor, we allocate a lot of resource in our budget for stimulating the economy but once again, without effective clean up in the banking system in the international arena, I think we will not have a good progress. So, I think that again the next G-20 Summit is very important for all of us, crucial thing that we have to do collectively, we have to combat, I should say we have to accomplish the immediate objective that we have to take.

I also hope the Summit will bring about an outcome that will be fair to developing countries. Indonesia has proposed the establishment of a "Global Expenditure Support Fund", I submitted this proposal in Washington DC before the G-20 Summit to help developing countries experiencing budgetary problems.

We also wish to see the G-20 to be the new permanent mechanism for global economic governance, because the membership of the G-20 does reflect the new economic realities of the 21st century.

I must say that we are fortunate that Indonesia has emerged relatively better than most other countries in the wake of the crisis - as The Economist commented recently about Indonesia, "so far, so good". It is my challenge of course to maintain the situation.

But the last thing we should be doing is to be complacent. I remain optimistic, cautiously optimistic about the future of the Indonesian economy. This is so due to several reasons.

First, the damage to our economy from the global financial crisis has been limited, because, unlike my close friends and my neighbours, Singapore or Malaysia, our exports are only about 29% of our GDP, which remain driven by domestic consumption. Our exports of course have been hit, and our manufacturing sector has suffered, but the impact is still manageable.

Secondly, I am reasonably optimistic that our fiscal stimulus - now up to 73.3 trillion Rupiah in various pro-poor and pro-growth schemes - will help create new momentum. 60% of such fiscal stimulus has already been enacted in January the form of tax cuts. In this regard, infrastructure projects will be important, and to realize this speedily we are focusing on infrastructure projects that are already in the pipeline.

We are watching the television today by then I after might be what to discussion that is broadcasted by BBC, CNBC, CNN. And the discussion is whether we choose tax cut or we increase the spending. And our policy is we are doing both and the most stimulus package both cutting the tax to certain at reasonable level. And we also allocate more resources in our bugdet to build more infrastructures and other stimulus package.

Thirdly, our banking sector is healthier compared to 1997. Our banks are not exposed to subprime mortgage. Indeed, the Indonesian banking industry has maintained a healthy credit growth in the past few years. The average loan-to-deposit ratio in our banking system and the ratio of non-performing loans have been low and stable.

Fourthly, we have benefited from the lower fuel price - although we cannot know how long it will last. We watch today in the television I believe Nymex and Brent prices about 52-53 dollars per barrel. And good news also today rupiah is strengthening from yesterday and also our stock is up from yesterday I see, I think we have 5% up in our stock. I hope it will continue.

On top of that, we in Indonesia have a known and tested quality of resilience. Indonesia has successfully managed a series of tough economic challenges and natural disasters: but each time we bounced back, and bounced back stronger. We are a resilient democracy, and that is a priceless national asset.

Indeed, the resilience of Indonesia’s economy is affirmed by all three ratings agencies, namely Moody’s, Standard & Poor’s, and Fitch’s rating on the country credit fundamental strengths of fiscal prudence against underlying risks to the country''s external finances.

With all this, I expect that we will be able to maintain a respectable 4,5% growth this year. We realize of course that this is a tall order, particularly as many of our neighbours and key trading partners are experiencing recession. But I do believe that such 4,5% growth is achievable, once again is achievable if only we manage all our resources wisely and prudently. That is why it is critical for us to be able to count on your partnership.

Your contribution and participation is important to us. Your success is also our success, just as much our success is your success. I very much look forward to what you have to say about how we can do together to survive the present global financial tsunami together.

Distinguished Business Leaders, Friends,
Let me say a few words on the political side. As you are quite aware, we have now commenced our elections agenda. The Indonesian Parliamentary elections are coming up on April 9th, and come 8th of July, there will be the first run-off of Presidential elections.

It is an exciting political season, a vibrant celebration of democracy through Indonesia. You could feel the situation I believe. I am pleased that 4 years since the 2004 elections, our democracy is getting stronger. We have focused hard on building our politics around the system, not individual. We have tried to evolve a better political culture - the politic of integrity. We have evolved a radically new political landscape with the local elections that have been held in recent years throughout Indonesia.

By the end of this year, all of the Governors, local Parliaments, regents and mayors will have been directly elected by the people which turns the pyramid upside down and changed political dynamics in Indonesia.

And in the wake of democratic failures or troubles in many parts of the world, we take pride in the fact that our democratic consolidation, and our reforms, continue to be on track, charging ahead.

Indeed, one of our biggest achievement is the fact that we have been able to achieve a rare feat among countries undergoing democratic transitions: to marry democracy with stability. My Government is the first since 1998 to last the full 5 years, Insya Allah and I expect this trend to continue. This is important in our democracy, in our politic, we have regularity of the government, of the parliament. The constitution said that the term of the government, of the parlianment is five years we are very working very hard to bring that regularity into reality.

Despite the loud noises that are part and parcel of any functioning democracy, I have every reason to believe that the elections this year will be peaceful, and will ultimately bring a stronger democracy for Indonesia.

And that ultimately is good for business. Thus, for those who might be entertaining a "wait and see" attitude, I say "don''t". Do not hesitate to plan, to explore, to invest, and to expand in our economy. The Government will continue to ensure a conducive business climate. In this difficult time, we cannot afford to loose the momentum.

Indeed, the general elections have also contributed to domestic demand and is thus stimulating the economy. The problem we are facing Ladies and Gentlemen is about the crisis of demand, we have to do what we can do to promote the demand. In this circumstances I am hoping that election economy will also so partly our economy problem.

I have actively been calling for all political parties and politician to spend, spend, and spend. Because if they do this, we all win, especially the small and medium businesses who need their election-related orders. The political stimulus has certainly been felt by advertising, public relations and communication agencies; T-shirt and textile producers, you see thousand of lack, local hotel and restaurants across Indonesia; transportation services and TV/Radio/Newspapers which are outlets for these advertisements – just to name a few sectors who have benefited from this election.

Ladies and Gentlemen,
Let me once again thank you for joining us in the afternoon discussion. I would now appreciate your input, and comment, probably complains not only on the global economy but also in our domestic economy. I will be glad to listen to you all and I will ask and talk my Ministers to take care of them, to have more talk with you all to find solution, good settlement that will bring benefit both for Indonesia, the people of Indonesia and all partners including you all.

I would also be interested to hear your views on what would the best way to reach the target of 4.5% of our economic growth. That conludes my opening remarks and I ask Minister Marie Pangestu to lead the discussion and I amp hoping that this meeting will producing good thing for our togerherness specially in overcoming the present economic crisis.

I thank you.


*****


Bureau for Press and Media Affairs
Presidential Household