KEYNOTE SPEECH BY DR. SUSILO BAMBANG YUDHOYONO
PRESIDENT OF THE REPUBLIC OF INDONESIA
AT THE B20 CONVERSATIONS WITH
Your Excellency Mr. Felipe Calderòn [:fe-lip kal-de-ron], President of the United Mexican State,
My Friends from the Business Community,
Ladies and Gentlemen,
First and foremost, I wish to thank President Calderòn for inviting me to address this important gathering of prominent business leaders and opinion makers from G20 countries.
I commend the B20 for the way it has been complementing the work of the G20, since its inception in Toronto in 2010. For we in Government—no matter how hard we try—cannot possibly achieve global economic recovery by ourselves. Our partnership with the business community is a must. It is no longer a choice.
We meet at a time of uncertainty in the global economy. And the mood of many nations is tinged with pessimism.
According to the IMF, global growth is projected to decrease from 4 % in 2011 to 3.5 % in 2012. In terms of regional growth, the OECD has predicted that the Eurozone will contract by 2 % in 2012. The World Bank projects that growth in the Asia-Pacific will slow down from 8.3 % in 2011 to 7.6 % this year. The bank estimates that developing countries collectively will grow by 5.3 % this year, a continued slowdown from the 6.1 % expansion last year and 7.4 % growth in 2010.
Indonesia’s growth is projected at 6,5 %. Indeed, since the global financial crisis erupted in 2008, we managed to be resilient, with growth slowing down but only to around 4,5 %, and it has been on the rebound since. But today, our export volume is increasingly affected by the weak global economic recovery.
We are therefore deeply concerned at the scale and magnitude of the crisis in the Eurozone. The prolonged economic crisis in the Eurozone and political dynamic in Greece at this very moment, have adversely affected the very heart of the financial and real sectors of several countries in Europe. I do not pretend to have a solution to this enormously complex economic, political and social problems in the Eurozone. However, I hope that one way or another our European colleagues will reach an agreement on vigorous measures to manage the crisis. The absence of such measures will have an unsettling consequence to all of us.
Another grievous factor that contributes to global instability is the tense situation in the Middle-East. Last year, tensions in that region inflicted on the global economy a total loss of some US$ 8 trillion, according to some estimate.
If these tensions persist, they can cause oil prices to rise even higher, thereby severely affecting oil-dependent nations worldwide. Currently, the price of oil is on a downward trend, however, we cannot be sure that it will remain that way. Economies that are already burdened by the debt crisis and recession will suffer all the more, once an outbreak of armed conflict disrupts the flow of oil supply.
Soaring oil prices pose a grave threat to global stability. They traumatize and wreak stagflation on oil-importing economies. They slowdown economic growth, reduce production and bring about recessions. Nevertheless, the shrinking demand from some of the largest economies may have brought a temporary reprieve to those soaring prices in recent weeks.
We are confronting problems that are increasingly complex and interlinked. There are no easy solutions. There are no short-cuts.
In the face of this reality, we pin our hopes on a successful partnership between our Governments and the B20.
Let me therefore present a few thoughts on how the B20 business community can further contribute to the work of the G20. And on how we could advance our collaboration.
First, in the face of growing uncertainty and tougher times, Governments and businesses need to work even closer together. This is no time for divergence and mistrust.
Thus, we need to better harmonize our respective agendas. The agenda of the B20 and the G20 need to be on the same page.
In the present context, I am therefore glad that the B20 has included in its agenda issues that are discussed in the G20. I commend the work of the B20 task forces - on food security, green growth, employment, improving transparency, trade and investment, ICT and innovation, and financing for growth and development. We need to ensure their synergy with the work of their counterparts in the G20.
In 2008, this is exactly what my Government did in the immediate aftermath of the global financial crisis. We swiftly held stakeholders meeting with business and labor, and we agreed that despitetough times we would do all we could to prevent layoffs that would hurt our people.
Second, we need to pool our respective resources.
As the front-liners of global commerce, business communities have developed “eyes and ears” for monitoring day-to-day business situations. You have the capacity to anticipate problems arising from government policies from a practical point of view. On our part, we have the authority to devise policies and strategies that affect businesses and general public. Your unique perspectives are valuable to the formulation of sound and viable social and economic policies.
In this regard, I welcome the various recommendations of the B20 Task Forces to the Los Cabos G20 Summit on issues to be discussed in the Summit.
And third, we must pursue joint advocacies in order to achieve greater impact.
It is important that our people are informed about what their Governments are doing in the G20, and what businesses are doing in the B20. Our people need to know that we are working hard on their behalf, and for their benefit. The B20 and the G20 can collaborate to promote public awareness of our forums and of our work. In that manner we gain their confidence and their support.
I also welcome the idea of building a comprehensive G20 website that is accessible to the general public, especially in the G20 countries. I am sure, the B20 can quickly initiate a similar undertaking.
Another important note : since Pittsburgh, the G20 has generated declarations, communiqués, and action plans. What we need now is to fully implement those outcome documents.
As time is not on our side, we need to do this soonest in order to avoid lose-lose scenarios.
G20 has to fulfill its repute as the “premier forum for international economic cooperation”, and come up with practical solutions that would make the world economic growth strong, sustainable, balance and inclusive. Emerging and developed economies should take concerted actions to implement those commitments. The voices of the emerging economies are not only a function of shared interest but must be a manifestation of their intellectual and practical contribution to the world economy.
I see a lot of opportunities for collaboration between G20 and B20 in raising public awareness and promoting social impact. This is doable, especially after you created a Task Force on Advocacy and Impact within the B20. I commend this effort, and I encourage the Task Force to be creative and innovative in achieving its objectives.
Let me now share with you the steps that Indonesia has taken in response to the current global economic situation. And what we have done to ensure the fulfillment of the critical role of public-private partnership that contributed to our economic resilience.
We managed to withstand the 2008 crisis, but we know that is not enough. Since the Eurozone crisis is still raging, we are closely monitoring its development and trends. When action is called for, we are not shy to take appropriate and robust measures.
We have adopted a crisis management protocol as a contingency against a full blown crisis. We will maintain a healthy fiscal balance with a budget deficit under 2.5 %, and a manageable debt-to-GDP ratio, which now stands at 24 %. On the monetary side, we have kept inflation low and our banking sector remains healthy. As our economy does not depend too much on exports, we are relying on domestic consumption and investment to drive our growth.
To mitigate the social impact of the economic crisis, we provide vulnerable members of our society with micro-credit through our national community empowerment program. We also provide opportunities for the poor to open savings accounts through our “Keluarga Harapan” program. This year, I hope to formally inaugurate our national strategy on financial inclusion, which we have conducted on a massive scale since 2007.
We are working hard to raise our medium and long-term agricultural productivity through public and private investments. To give our rural population greater access to financial services, my Government delivered USD $ 890 million in loans to farmers and farmers’ cooperatives last year. As to the private sector, at the 2011 World Economic Forum on East Asia, the Partnership on Indonesian Sustainable Agriculture was established to facilitate private sector investment in agriculture.
Indonesia is also allocating more resources for the Food Price Stabilization Fund and the Government Rice Stock Fund for 2012. We are strengthening our food support for the poor by scaling up our rice-for-the-poor program from 2.9 million tons to 3.1 million tons for the period February 2011 to February 2012.
Indonesia is also making a strong push in infrastructure development through our Master Plan for the Acceleration and Expansion of Economic Development.
The Master Plan seeks to step up programs in the prime economic sectors, speed up infrastructure development, ensure energy security and enhance human resources in science and technology.We made sure that this Master Plan was develop with all the stakeholders : the central Government, the Regional Governments, the business community, economists, scholars and interest groups.
In support of these efforts, I invite your active participation in investment development through public-private partnership schemes that are readily available in the Master Plan. Your investments will unleash the power of our development programs to bring about progress for our people and generate profits for investors.
We in Indonesia are great believers in the wisdom of directing excess global savings to investments in infrastructures, particularly in emerging economies. It will boost demand for capital equipment and technology, including those from advanced economies, while fostering growth in the developing and emerging world.
At the G20 Summit, I will make a strong case for Multilateral Development Banks playing a key role in support of these efforts. They can help by diversifying sources of funding through greater use of credit enhancement and partial risk guarantees. Beyond mobilizing financing, they can provide recommendations to help developing countries overcome constraints, involve the private sector and develop well-advised projects priorities.
Meanwhile, in spite of the challenges to the global economy, I am optimistic that we will prove resilient should another global downturn spills its contagion upon us. Our political stability, our prudent fiscal policies and our commitment to inclusive economic growth, will serve us in good stead.
According to UNCTAD, Indonesia is among the top ten most attractive FDI destinations in the 2010-2012 period. This is due to improvements in our FDI-related procedures and our sovereign investment rating, which some rating agencies have raised to investment grade.This is testified to by the fact that realized investments increased by more than 30 percent in the first quarter of 2012.It also reflects upon the fact that, given the many opportunities there are in Indonesia, there is no reason for that trend not to continue.
As we strive to maintain this momentum, we are very conscious of the need to avoid protectionism, and we realize that we need to promote openness not only in investment, but also in trade.
Ladies and Gentlemen,
It is my fervent hope that this year’s B20 Meeting will bring together governments and the business community closer than ever before.
Let us join hands and seize every opportunity for creating wealth for ourselves and for future generations. Let us coordinate our efforts to stimulate the global economy. And let us work together to create employment that is highly needed by peoples all over the world.
May I also remind you that opportunities are particularly abundant in emerging economies. Not only have these economies proven to be resilient, they also hold tremendous growth potential. I, therefore, encourage you to realize that potential.
Indeed, overall, the emerging economies have done reasonably well in recent years, maintaining some degree of resilience that was helpful to the global economy. In the emerging economies, we saw an interesting trend : the rise of diplomatic, economic, corporate confidence. This confidence is a precious thing, but like any other psychological phenomenon, it is not permanent. Emerging economies must not take this rare surge of confidence for granted, and just as we earned its coming, we must also earn to keep it going as long as possible in the years ahead.
In the case of Indonesia, our goal is to become among the top 10 largest economies in the world in the coming decades. I invite you to join Indonesia as our partner in this promising journey.