Tuesday 1/9/2015, 10.26 WIB
Joko Widodo
The President of Indonesia
Lets not get swayed easily by misguided information Our economy is not in a crisis like it used to be even though we still need to stay alert said President Joko Widodo
Donang Wahyu|KATADATA

KATADATA – President Joko Widodo, on Monday (31/8), had spent half of his day to explain all kinds of issue regarding the current national economic condition; starting from the rumors of economic crises, the infrastructure development project, up until the handling of corruption case made by the law enforcers that often triggers a riot.

Starting with a lunch, Jokowi conducted the first meeting with several economists. After that, the meeting continues with several redactors from various media for economy; and before the president moved on to the next event, he had a meeting first with Vice President Jusuf Kalla.

In the two-hour discussion in the State Palace, Jokowi was wearing casual brown batik. He then got up from his seat and starting his presentation while using his laser pointers.

Fluently, he explained the data of the recent economic condition to deny all kinds of issue regarding an economic crisis that is rumored to have hit Indonesia. He then showed several pictures of various infrastructure projects that are being accelerated in several regions.

And thus, this is the explanation of the President and the summary of the Q&A session, with a number of off-the-record notes within it.

How is the economic condition now and the crisis issue?

To see the current economic condition, we need to see first the comparison of economic data between the years of 1998, 2008, and 2015. The current condition, generally, is better compared to 2008. And a long time ago, rupiah had rocketed from IDR 1,800 per US dollar to IDR 16,650. I remember it clearly since back then I was still an exporter.

However, now rupiah is in the level of IDR 14,000-ish per US dollar?

Now it is indeed at the level around IDR 14,000, but we need to remember that it depreciated from the level of IDR 12,650 per US dollar in 2008. And because of that, if we are to see from the depreciation level, it is still considered to be lower than 1998 and 2008. Besides, the NPL number (non-performing loan) and inflation is also lower than 1998, that each could reach 30% and 82% (look: table).

So, the current economic condition is relatively secure?

Let’s not get swayed easily by misguided information. Our economic condition is not in a crisis like it used to be, even though we still need to stay alert. Yesterday I was in the carnival (Pontianak, in the middle of the equator), watching soccer (Presidential Cup in Bali), and these things are done in order to show that the President is still calm, because the condition is not as grave as people think it is.

The problem here, if crisis comes all of a sudden, right now there hasn’t been any adequate legal basis, since the regulation about the financial safety net system has been lifted away…

The government has given the draft law to the Parliament.

But, the discussion will only be done in the Parliament by October?

I have asked for the discussion process to be accelerated so that it can be done by September, because this legal basis is very important.

How is the development of infrastructure projects?

There are many people that criticize that it’s just groundbreaking… just groundbreaking. Let’s see the reality in the field. The development has passed quite many stages and it continues to develop until now. I have seen it myself on the field, not just based on the reports from the ministry. (President then showed some slides that described the infrastructure projects in various regions).

How about the PLTU Batang project?

This project would soon be completed, not for the benefit of the investors, but for the people. With electricity, the children can learn. The milling or grinding cost will also be lower, since diesel won’t be efficient enough. The report that comes in the media is always from the investment side, but what actually matters ere is the benefit aspect for the people.

The project is delayed from the set target…

Well the several months’ delay won’t be a problem. We need to remember that previously it has already been overdue for years.

After that, which power plants will be developed?

Another power plants that will be developed after Batang are in Cirebon, Kalimantan, and South Sulawesi. The problems that often arise are two things, which are permit problem and land acquisition. But regarding the problems, there has been Legislation (No. 2 Year 2012 regarding land acquisition for public benefit).

Other priority?

Other important project that will be developed by the government is geothermal, because for geothermal, even if the location is in the middle of the forest, it will only use a relatively limited amount of land. And besides that, the geothermal potential in the country is very large. I’m starting to think that, we need to build a geothermal state-owned firm.

Regarding the 35 thousand MW electricity project, would it be as it has planned?

(Regarding this, the Maritime Coordinating Minister Rizal Ramli has different opinion with the Vice President Jusuf Kalla and the EMR Minister Sudirman Said. According to Rizal, the project is unrealistic).

“This is not about the target, but it is the need of the people. What if the electricity keeps on blinking bright and out all the time? And so, the project would still be targeted to be as t has planned. But again, the problem here is about the permit and land issues.”

Other boosted infrastructure project?

One of the important ones, and is built everywhere, is a reservoir, and this includes the seven reservoirs in NTT. Our dream is to make Indonesia as a self-sustaining nation in terms of her food ingredients. And to reach that, water is of an important essence. And this is the reason for the government to be eager in building reservoirs and dams that numbers tens of thousands.

Highways and harbors?

The highway development for trans-Sumatera route is being pursued eagerly. For the highway route from Aceh to Lampung, it has been targeted to be finished in 2018. And besides that, the road from Palembang to the East Java has also been targeted to be done in 2018. And to accelerate this, then the halted highway concession would be taken by state-owned company, while for the harbors, the Kuala Tanjung Port is targeted to be completed in 2.5 years.

Other than infrastructure matter, how about the ‘people’s credit for business’ (KUR) program?

The KUR interest rate this year has been lowered from 22% to 12%, next year it will be lowered again to be at 9%. The subsidy fund for the KUR would also be increased. And thus, it will be effective, that the fund is allocated in the form of interest subsidy compared to give some social donations in the form of goods and ingredients.

With those projects, how would the budget absorption target be this year?

The target for budget absorption this year is 91-93%, while the target of capital spending is around 85-86%.

The problem here is there are many policy makers are now afraid to spend the regional budgets…

By referring to the legislation, later on Government Regulation and Presidential Regulation will be released in order to prevent criminalization for the officials who make the decisions. Don’t let them get into the area of criminal punishment. Corporations could gain benefit from this, but could also lose profits. And if the officials can be brought to the criminal punishment just for making decision, then the state-owned banks’ directors can also suffer the same fate.

However, it looks like the law enforcer officials have a different understanding…

There are many things that we need to set straight. The officials still do not have a one mind. And that’s why I gathered them in Bogor (the palace).

How would the solution be for the case of the Pelindo II President Director R. J. Lino? (Last Friday his office was being searched by the National Police’s Criminal Investigation Directorate. Lino then was threatening to back off from his position if the President doesn’t want to get his hands on this to solve the problem)

I’m still studying about the case so that I won’t step a wrong foot. (The President has refused to specifically answer it and gave an off-the-record reply).

What about the permit problem that is seen to be complicated?

The permits have been cut down. I have met with the businessmen and the Indonesian Chamber of Commerce and Industry (Kadin). Later on I would re-invite the businessmen to Bogor Palace. If we need to do a marathon meeting for two days and two nights to solve this, we’ll do it. All this time the mistake is not result-oriented, but on procedure-oriented.

Economic Indicator Comparison between Current Times and Crisis Period


Metta Dharmasaputra