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The Rebuilding of Indonesia :
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Opportunities for New
Partnership
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Keynote Speech
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Aburizal
Bakrie
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Coordinating Minister for the
Economy
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Republic of Indonesia
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Asia INC. Forum, Brunei
Darussalam
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April 27, 2005
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Distinguished participants
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and Gentlemen
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It is great honor to stand before you this
morning. It is now interesting time to explore and to
discuss many issues faced by
Indonesia.
The country has just opened a new chapter in its long and
difficult journey to become more democratic, more prosperous
and more stable. Now, we want to see the problems we are
facing in anew perspective, with a new determination to
solve them. Hence, we will appreciate any suggestions, any
offer of help, from our friends around the world on how
Indonesia should achieve its objectives and its many
problems.
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On this point, let me extent my great
appreciation to the Brunei National Business Conference.
This forum is a very prestigious event. It brings together
300 delegates comprising a wide cross-section of
Brunei’s
business community and government, including business
leaders. In this forum, I believe you will exchange many
interesting ideas, explore new insight, and come to see the
world in a different light.
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- Ladies
and Gentlemen
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Let me start my keynote speech with a brief
review on Indonesia and its economic conditions. After long
years of economic crisis, the Indonesian economy has shown
some outstanding improvements. In 2004, the economy
performed better than expected, the inflation was low,
interest rate fell, stock prices surged to the highest level
ever.
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What is also encouraging is that our growth last
year was not driven solely by consumption, but also by
exports and investments. For the first time since 1997
crises, our investments grew by 13.7 %, and our exports by
18.3 %. Because of this, some economists, including those of
the IMF and World Bank, believe that the era of high growth
(above 6 and 7 percent per annum) is no longer impossible
for Indonesia in the coming years.
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In regard to other matters, such us the
government’s fiscal conditions, Indonesia is also in a
positive trend. In Asia,
Indonesia is now one of the countries with
the smallest deficits. The country’s from 99 % in 2000 to 53
% in 2004. It is predicted that by the end of 2005 the ratio
will be at around 48 %. This is considered very good, even
for the OECD standard.
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In addition, the major rating agencies have
finally acknowledged Indonesia’s economic progress.
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a. Moody’s
upgraded Indonesia two-notch in 2003 to B2, once in June
other in September.
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b. S&P
upgraded Indonesia three-notches in 2003 and 2004 to B+, in
May 2003, October 2003 and December 2004.
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c. Fitch
upgraded long term local and foreign currency sovereign
ratings from B+ to BB-with positive outlook (January 2005)
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All of this
shows that our economy is moving in the right direction. Of
course, this success so far should not blind us from seeing
other reality and the weaknesses as well as problems in our
economy. The Macroeconomic stability has not yet fully
translated into job creation. Even though we estimated that
in 2004 we have created 2.3 million jobs for the people, the
figure is still less than the new entrance in the labor
market, estimated around 2.5 million every year. This is
among our biggest challenges in the next five years.
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It is now important for Indonesia to reform its
micro-economy, while preserving our the macro-economic
stability. It means that we have to improve our investment
climate, create business-friendly regulations, dismantle our
high-cost economy, reform our tax system, and many other
things.
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It is also important for us to realize that our
growth cannot be sustained, and our poverty cannot be
reduced further, if
Indonesia
fail to develop its infrastructure and to modernize its
agricultural sector. We have tu build road, bridges, power
plants, ports and airports, and at the same time helping our
rural areas to use a more productive economic means of
productions.
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Let me assure you that the Indonesian
government, led by President Yudhoyono, understanding those
problems. With a stronger mandate, we are going to meet our
challenges. In the coming years,
Indonesia
is going to be a stronger country, with more peace and
prosperity. I believe, we can do it better this time. The
opportunity and the momentum are here now. We certainly need
friends to meet the challenges ahead.
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- Ladies
and Gentlemen;
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Allow me now to talk about infrastructure. I
think everyone here today would agree with me that one of
the most pressing problems Indonesia is facing is the
under-investment in infrastructure. Since the 1997 crises,
investment in infrastructure has steady declining. As the
result, if we look around the country, we will see congested
urban roads and highways, deteriorating rural roads,
inefficient rail and sea transportation and bottlenecks in
the energy power sector.
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Infrastructure is the backbone of development.
Without solving the problem in our infrastructure, economic
growth and employment creation cannot happen. From our
estimation, in order to achieve the average GDP growth of
6.6 percent per annum in the next five years, Indonesia
needs about Rp. 1,300 trillion in infrastructure investment.
From the government budget, we can only provide about 17
percent, it is clear that there is still a huge funding gap
that we need to fill.
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Despite the problems, the government is
committed to improving the country’s infrastructure. As a
start, early this year we had a very successful Summit. Let
me repeat what we have promised in the Declaration of
Action on Developing Infrastructure and Public Private
Partnerships of the 2005 Indonesia Infrastructure
Summit.
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First, the government will focus it own
resources increasingly on sector which is not
commercially-viable or will not attract investment. We will
push our maximum effort to allocate our public resources to
accelerate infrastructure development in rural and remote
areas.
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Second, to attract larger participation of
the private sector, we will focus on reforming the
commercially-viable sector. This will be done by removing
bureaucratic bottlenecks as well as regulations which
inhibit such partnership and participation.
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Third, more immediately, the government will
enact programs to support greater public-private sector
partnership in infrastructure investment.
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believe initiative will boost our competitiveness and
intensify our efforts to bring more Indonesia households to
well above the poverty line.
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The strategy we have set requires good and
effective implementation. We realize that this aspects is
crucial. We have seen a renewed interests among our
potential investors, domestic and foreign. The
Infrastructure Summit, for instance, received a surprisingly
wide attention from all over the world. Now we have to
deliver. And on this front, actions speak much louder than
words.
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- Ladies
and gentlemen,
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I realize that our economic objectives can only
be achieved through economic partnership in trade and
investment with many countries, including Brunei Darussalam.
Open and common trade is deep in our past. Historians like
to say that 500 years ago economic globalization started
with nutmegs and gloves. Traded by sailors who navigated the
ocean by looking at the constellation in the sky, these
first products of global economy went from the islands of
Banda and Maluku to the port
of Malaka, and from there to the shores of India, Middle
East and Europe.
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In fact, for some people in our region, it was
trade and the open sea that formed their basic identities
and way of life. It is also a historical fact that most of
the major cultures in our region evolved and grew rich
because of the socio-economic benefits brought about by the
increasing connections among the sailor-traders from many
distant lands in search for profit.
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In short, open trade and the profit motive were
part of our strength. It what made us great before, it
should also become our hope and strength in the coming
years.
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Indonesia is now realizing that we have to use
this strength. So, instead of closing our border, we are
going to open economy as far possible. We will facilitate
our friends from abroad-individuals, corporations, and
governments-to come more the possibility of doing business.
By doing so, I strongly believe,
Indonesia
is going to be stronger, and the people’s welfare will be
improved.
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- Ladies
and Gentlemen,
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Let me now turn to our region and its
conditions.
Indonesia
and Brunei are part of Asean. We are proud of it. But now we
are faced with important questions : do we need to enlarge
this regional entity ? If so, to what and with functions ?
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This question has been partly answered by the
leaders of the region. Yes, we need to enlarge Asean by
enlarging its partners with the concept of Asean+3 (Japan,
China, Korea). Now, what about the “ rest ” ? India,
Australia and New Zealand are also geographically in our
neighborhood. Should we include them also, and fortify the
concept of “ Greater Asia ” with a giant member in South
Asia (India) and advance economies of Australia and New
Zealand? The answer to the question will in the future
affect the political and economic dynamic in Asia and, in
the world.
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To Indonesia, the answer is obvious. We are
supportive of the inclusion of
India, Australia and New
Zealand. More is better. By taking the course of cooperation
in this direction, we can achieve a larger purpose. Asia is
emerging as the world’s economic dynamo. The region of
Asia-Pacific, with almost half of the world’s population,
has replaced the Atlantic as the centre of world’s economic
dynamism.
China, with over 9 percent growth per annum,
is the fastest growing country in the world, and India is
now awakening by achieving 6 percent growth in the last
couple of years. Japan, South Korea, Taiwan, and Asean
countries are performing well : most of the countries in the
region have already regain their speed after they were hit
hard by the 1997 financial crises.
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So, by developing and strengthening our
relationship further, we can be part of the giant process of
integration and economic dynamism. And with this, our
societies will be better off.
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Distinguished participants
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- Ladies
and Gentlemen
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Let me close my remarks by saying that Brunei
and Indonesia share a fundamental commitment to economic
growth and development. The Indonesian government has sent a
clear signal that it wants to create an environment that is
essential to achieve the level of growth that will ensure
employment and prosperity for all Indonesians. And in this
effort, Brunei companies and business communities are our
friends. This relationship is one of the most unique and
fruitful, sustained by high level interactions between two
countries in the ASEAN. And in the future, I believe this
relationship is going to be even stronger.
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- Thank
you
