Assalammu’alaikum Warrahmatulahi Wabarakatuh
Dr. Kim Hak-Su, Executive Secretary, UNESCAP
Ladies and gentlemen,
I wish to congratulate you all for your success in holding the third Asia-Pacific Business Forum (APBF) held here in Jakarta along with the 62nd Commission of the UN Economic and Social Commission for Asia and the Pacific today.
I see many friends and prominent figures, and I am pleased to be here with you all this evening.
Much is expected from this important Forum of government leaders, captains of business and industry, and eminent representatives of civil society.
It is expected to enhance regional economic collaboration and business-to-business contact. It is also expected to promote much needed dialogue between the business community and the government sector in our region on various issues of mutual interest.
That is why the Forum has adopted the topic, “Strengthening Public-Private Partnerships.”
I therefore look forward to the recommendations of this Forum and the follow up measures that it will undertake. I am sure they will be relevant and helpful to our efforts at creating opportunities for our people to gain a higher standard of living.
That is our basic goal in Indonesia. That is why we are pursuing policies aimed at macroeconomic stability, high economic growth, improved investment climate and legal certainty, as well as competitive infrastructures for development.
And we are going to make the most of what we have. Indonesia is strategically located along some of the world’s major trade routes in Southeast Asia.
We have vast natural resources, a huge domestic market, and a large and competitive workforce.
And, most important, we have a government committed to creating a more favorable investment climate.
Our basic strategy for creating a favorable investment climate has been a relentless pursuit of reform. In the spirit of reform, we made a transition from 30 years of authoritarian rule to a system that has earned us recognition as the world’s third largest democracy. At the same time, we overhauled our financial and banking sector. Today we continue to cleanse our society and our bureaucracies of the taint of corruption.
The economic rewards of our reforms are evident:
Growth has been picking up steadily and reached 5.6 percent in 2005.
We hope to achieve an average of 6.6 percent growth in the next five years.
Income per capita has returned to pre-Asian Crisis level, at USD 1030.
Investments are increasing at a rate of 11 percent a year.
We have made our recovery from the Asian Crisis. We have completed our “consolidation phase” and are now moving into a “growth phase.”
We accomplished this largely by safeguarding our macro economy. Monetary policies were consistently directed at achieving a medium-term inflation target.
Meanwhile, restructuring of the banking sector continues to ensure stability and to enable it to serve as financial intermediary. Fiscal policy is aimed at fiscal resilience and sustainability, while serving as an instrument of economic expansion.
Determined to make investment the engine of our economic growth, we are accelerating the realization of approved investments, strengthening the rule of law and setting up a business-friendly legal infrastructure. We intend to apply national treatment to every single investor.
We are modernizing our labor regulations to reduce the rigidity of the labor market, while improving the welfare of labor and protecting their rights. We are simplifying our tax laws and regulations to reduce distortion and red tape. We are establishing a clearer tax dispute mechanism and revamping our customs procedures to improve service and eliminate corrupt practices.
At the sub-regional level we are cooperating with other ASEAN members to promote growth areas around our common borders. Thus in the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) and the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), we are harmonizing policies and procedures to facilitate the flow of goods and service and the entry of foreign investments.
To rationalize the cost of doing business anywhere in Indonesia, we are seeing to it that the local laws and regulations of the regional governments are congruent with national laws and regulations—especially those on taxation.
We will have a clear division of powers between the central and regional governments in the areas of budgetary expenditure, infrastructure management, implementation of economic and social policy and ensuring free internal trade between regions.
That makes Indonesia more attractive to foreign investors. It also provides a stronger basis for long-term stability and security all over the country.
At the same time, we are taking vigorous steps to enhance the partnership between government and private business—a partnership so important to the achievement of the MDGs.
All over the world, the term “public-private partnership,” or PPP or P3, has become a buzzword. In Indonesia it is an integral part of our strategy for mobilizing investments.
With such a partnership in place, government institutions benefit from the management skills, financial acumen and entrepreneurial spirit that they can imbibe from the private sector. On the other hand, the government provides a favorable environment for the private sector as it engages in economic activities that redound to the welfare of the people.
Thus, the partnership between the government and the business community leads to sustainable development.
Of course, there is no one-size-fits-all formula for public-private partnership in the countries of Asia and the Pacific. The partnership operates on a broad spectrum of development activities, which vary greatly from country to country. What we can therefore do is to exchange experiences and best practices so that each country may be able to design the kind of public-private partnership that best fits its situation.
Indonesia has taken three major policy initiatives to promote the business sector’s involvement in development:
First, we have set up a strong legal basis for reducing uncertainty.
Second, we have eliminated major regulatory barriers that discourage free competition.
And third, we have established a market-based pricing policy.
At the regional level, so much more needs to be done. We should now begin discussions on regional public-private partnership investments. I invite everyone present here today to begin exploring ways of establishing solid partnerships between the governments of the region and all the private sectors of the region.
I realize, of course, that corporations gravitate toward large-scale and capital-intensive undertakings. But a good case can be made for small endeavors, especially those in the rural areas. During the 1997-98 Asian Crisis, our micro, small and medium enterprises proved more resilient than many big corporations. They helped revive Indonesia’s devastated economy.
Thus today big business is called upon to help promote micro, small and medium enterprises and micro financing schemes. By forming close and mutually beneficial collaboration with micro, small and medium enterprises, you will be getting reliable business partners. You will also be helping your region and your people achieve their MDGs—because in a real and tangible way, you will be helping make poverty history.
Indeed, we have in our hands an enormous power that can be used to solve many of the problems of the human condition. I refer to the power of collaboration—the power of partnership.
Let us wield it to shape a more peaceful, more secure and more prosperous Asia and Pacific region, and a better world.
I thank you.
Wassalammu’alaikum Warrahmatullahi Wabarakatuh
Jakarta, 8 April 2006
President of the Republic of Indonesia
Dr. Susilo Bambang Yudhoyono