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Opening Remarks by Dr. Susilo Bambang Yudhoyono, President of the Republic of ndonesia at Forbes Global CEO Conference Singapore, 4 September 2006
Thank you for your kind introduction, Steve.
Thank you so much for the invitation to address this very distinguished group of business leaders from around the world.
For those of you who are just getting to know us, let me tell you that I represent a nation that have experienced a major transformation at the close of the 20th century.
Today, Indonesia proudly calls itself the world''s third largest democracy, after India and the US. We also take pride in the fact that as a nation with the world''s largest muslim population, Indonesia is living proof that Islam, modernity and democracy CAN and DO go hand-in-hand.
Pardon me for being bullish about our democracy: it is only because I believe passionately that democracy is good for business. Democracy is forcing us to constantly improve governance, which means more responsive, more accountable and more transparent Government—which is what business want.
There are those who say that democracy has made Indonesia more noisy, in ways that sometimes can be distracting. Well, we have always understood that democracy is anything BUT easy, and it can sometimes be messy, but of course we HAVE to go through this phase to become a resilient vibrant democracy.
My objective as Indonesia''s sixth President is to advance democracy and reforms, accelerate Indonesia''s transformation, and rebuild Indonesia’s economy after the crisis.
I must tell you that the past 2 years has not been easy. We faced a number of unexpected “unknowns” : the tsunami, the earthquakes, the high price of oil which crunched our budget, the rise of the Federal rates, terrorist attacks, avian flu.
Nonetheless, Indonesia continued to move on, and move forward.
The best description of what is happening in Indonesia is recently found in a magazine cover page, and I quote the title: "Indonesia on the move". And I think they got it right.
My Government has now launched an anti-corruption campaign that is perhaps unprecedented in our nation''s history. Our anti-corruption measures have spared no one from the arms of the law: former Ministers, senior officials, governors, regents, mayors, Parliamentarians, military officers, corporate figures, smugglers, and so on have been investigated and tried for corruption.
There was in fact a study conducted by the World Bank and the Institute for Economics and Social Research of the University of Indonesia which revealed that, in 2005, bribes to government officials as a share of production cost dropped from 10.8% in 2001 to 6.4% in 2005.
We also scored a historic victory for peace, when we finally reached a peace accord with the Free Aceh Movement in Helsinki in August last year. We hope that this would permanently end a bloody conflict which had gone on for 30 long years. The situation in Papua is also improving significantly, particularly with the success of the local elections and new policy initiatives which aim to address issues of prosperity, justice, basic needs as well as affirmative action.
Economically, my Government has actively pursued what I would call “the triple track” strategy. First, achieving sustainable higher economic growth through a combination of strong export and increased investment, both domestic and foreign. Second, stimulating the performance of the real sector to create employment. Third, promoting the development the rural economy and agriculture to alleviate poverty. I like to think of them as the “pro-growth, pro-job, pro-poor” strategy. Our greatest challenge now is to continue to create jobs and reduce poverty.
The good news from Indonesia is that we have been able to maintain macro-economic stability and lay the foundations for higher and better quality growth.
Last year, our economy grew by 5.6 %. In fact, my Government took the politically difficult but economically necessary measure to significantly reduce oil subsidies which had crunched our budget, and we raise fuel prices not just once, but TWICE.
That’s not all. Our export growth for the first semester reached 14.4 percent, much higher than originally targeted. With the reforms that we have started to ensure Indonesia’s competitiveness, I am optimistic we can continue to experience robust growth in exports. Furthermore, the trend is for inflation to come down and we are confident that inflation will be 8 percent this year or even lower. Our reserves have also increased to US$ 43 billion. And our debt situation is improving. In 2000, the government debt to GDP ratio was a whopping 88,6 %; last year, it was reduced significantly to 48%.
Meanwhile, the Jakarta Stock Exchange has performed so well in recent years that it is now ranked in the top three in Asia.
In fact, Indonesia''s credit rating--be they from Standard and Poor, Fitch, or Moodys--continues to improve and they are at their level best since 2001.
To improve the investment climate, we have issued three packages of regulatory reform:
First, improvement of investment climate package, by§ improving taxation and customs administrative system, speeding-up
investment procedure and services and create better labour condition.
Se§condly, Providing better infrastructure policy to produce more attractive condition for private investment in
infrastructure project, and;
Thirdly, further§ reform of the financial and banking sector.
All in all, we have been able to deepen structural reforms within the context of a democratic Indonesia. It will take longer to achieve because it is no longer top down, and has to go through the necessary processes of Parliament and socialization to the wider public. But because there will be wider ownership, our reforms will be more sustainable.
Knowing that it will take longer, we are also doing short term measures to create best practices in certain geographical areas, or special economic zones.
One area which I am particularly keen about is the development of our bio-energy. My Government is now seriously moving towards diversifying our dependence from fossil fuel to gas, coal and bio-fuel.
Bio-energy development will have wide-ranging impact on our economy : from energy security, to agriculture, to job creation, to fuel-subsidy reduction, to environment, to infrastructure development, as well as strengthen rural economy. Given our climate and land availability, I envision that Indonesia could potentially be the Bio-Fuel World Capital in the next decade.
So as you see, we are facing an uphill battle, and all the challenges that come with it. But Indonesia continues remains a country of great promise and potentials. And as Indonesia “moves on”, there are plenty of opportunities for you.
For those who are thinking of investing in Indonesia, let me share with you a few tips. First, look at those who have invested in Indonesia recently, and you will see that most of them are making profitable returns. This is true of Jardine Matheson, Farallon, Temasek, Buma Consortium, Philip Morris, Singtel, Khasanah, and the list goes on. So if you make the efforts and spend the necessary resources in Indonesia, great rewards await you.
Secondly, we are blessed with abundant natural resources and large market of 220 million people. Our per capita income already reached $1300 last year, which is above the pre-crisis level, and is expected to reach $ 1500 this year. We are also the largest market in Southeast Asia.
And thirdly, Indonesians are by character a very resilient people. We went through so much as a nation —financial crisis, conflicts, terrorism, tsunami, earthquakes-- and yet we bounced back stronger each time. There is an outstanding quality of resilience about our system and our people that I think you in the business world would appreciate and can benefit from.
One final thought. People have always asked me : Where do I see heading Indonesia years from now ? What will become of Indonesia ?
Well, I see Indonesia becoming a stronger democracy, a stable democracy which is home to a pluralistic, open, tolerant modern nation. I see an Indonesia no longer burdened by conflicts, poverty and ignorance, and instead becoming a bastion of freedom, tolerance and rule of law.
I do hope that Indonesia will continue to be the anchor of stability in Southeast Asia, an active driver of regionalism in Southeast Asia and an ardent proponent of the ASEAN Community. Southeast Asia, with Indonesia as its largest country, is the third engine in this robust Asian Region that will complement the emerging economic powers of China and India.
With the success of reforms, Indonesia will be an easy, attractive and profitable place for businesses-- local and foreign--to grow.
I am convinced that, with the right policy and lots of hard work and perhaps a little luck, Indonesia''s GDP will double in the next 10 years!!
That vision of Indonesia is not only within OUR reach; it is also within YOUR reach. I invite you to join us and grow and prosper with us. I promise to do all I can to make it one of your best investment decisions.
Thank you.
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