President Joko Widodo: Interview

Interview: President Joko Widodo

How will the new administration address investor concerns and improve the investment climate?

PRESIDENT JOKO WIDODO: Indonesia is a country open to investors. We are working hard to fix the issues that have traditionally kept investments away, and we want to convey the message that we are doing everything we can to improve the investment climate in the country.

We are working hard to reform our bureaucracy, our institutions and the human resources involved. We are improving the investment climate by simplifying and expediting the regulations surrounding the processing of business permits and licences.

In January 2015 we introduced the one-stop service office and have gathered 23 ministries at the Indonesia Investment Coordinating Board (BKPM) to grant such permits and licences. Our ultimate goal is to develop an open, transparent and fast investment permit process. We understand this has been a concern and a source of investor complaints, and we are proactively seeking to fix these issues and convince the investment community that the country has changed.

We are also pursuing a simplification of the land acquisition process, which we expect to be eased through the execution of the Land Acquisition Law starting in January 2015. Power generation is another major concern for investors. Therefore, power plant projects will be ramped up to reach a national target of 35,000 MW by 2019. In 2015 alone we expect to achieve 11,000 MW of new power generation. For this we will also need the collaboration of the private sector.

What are your administration’s maritime priorities, and what role will the private sector play?

WIDODO: The new government has a strong vision and commitment towards the maritime sector. To make Indonesia a maritime powerhouse both regionally and globally, we have developed a strong agenda based on five different focus areas. First, we want to bring back and rebuild the maritime culture that Indonesia had hundreds of years ago. Second, we will focus on managing our maritime resources properly, making sure these are harnessed legally and efficiently. Third, we need to boost the realisation of maritime infrastructure projects, improving the connectivity between islands by having more seaports across the archipelago. We will also make sure that our maritime diplomacy is aligned with our vision, positioning Indonesia as a strong and well-respected player in the sector. Last but not least, we will make strong efforts to improve maritime security. The issue of illegal fishing is also a very important subject for this administration, and we have already taken strong actions to make a clear statement that we will not tolerate such illegal activities.

In terms of seaport development, our plan in 2015 is to have seven new or expanded ports, with a total of 24 ports by the end of the first presidential term. These will be funded partly by the national budget, but we will also need strong investment and collaboration with the private sector. In fact, we are seeking cooperation with the private sector not only for the ports, but also for toll roads, airports and railways.

We are confident that we will be able to develop these projects, as we have successfully restructured our fuel subsidies and reallocated national funds to more productive areas. We now have fiscal space of around Rp230trn ($19.01bn) to make investments in these projects. With the capital in place, all we need to do at this moment is take the necessary action and make sure the projects move forward. We must start now.

How is the government implementing IT solutions and how can it encourage creative industries?

WIDODO: Building an IT system within the government is very important. We have built an IT system for BKPM, and in the future we want all ministries to be integrated within the same structure. For example, concepts like e-purchasing, e-catalogues, e-audit and e-budgeting will be essential for this administration, as they will allow us to easily check and control spending by government bodies and improve the transparency of our national budget. In fact, these systems are now being implemented in Jakarta, and once successfully tested, they will be extended to the entire nation.

In the area of education we are testing an electronic national exam in 2015, which would allow students to submit their tests through a computer to a web-based system. This is already in place for 10% of students and may also be expanded nationwide.

One of our main goals is to encourage younger generations to develop a strong creative economy and boost its impact on GDP. To that end, in January 2015 we established the Creative Economy Board, which aims to foster business development not only in IT, but also in film, animation, games and online stores, among others. Indonesians, especially the youth, are very talented. We simply have to give them the tools to develop their capabilities and achieve their potential.

How can Indonesia ensure that its current demographic dividend turns into long-term progress?

WIDODO: We realise we have a demographic bonus, and we need to take advantage of that. This is something that other countries in the region do not have – at least not on the same level. Therefore, if we are able to capitalise on it, we will definitely have a competitive advantage in ASEAN. The question is how to effectively and efficiently achieve this. Our administration is focused on providing the right training to our people and building technology clusters, polytechnic universities and vocational schools. Our goal is to be able to reap the benefits of these efforts by 2025 or 2030.

What efforts will be made to encourage more transparency and accountability in the political sphere?

WIDODO: Eradicating corruption is essential for this administration. This is an important reason why we want to implement a robust IT system across all government agencies, so we can easily check and monitor the spending of public funds. However, this is not enough. We also need strong law enforcement, and to this end the Corruption Eradication Commission, the police and the attorney general must fight corruption side by side. With a real collaborative effort amongst all stakeholders, we are confident corruption levels will decrease in Indonesia in the next few years.

How realistic are plans for universal health coverage by 2019, and what are the major obstacles?

WIDODO: By 2015 the total number of Indonesians covered by health insurance programmes will be 143m, 84m of who will be under the national Healthcare and Social Security Agency. The rest will be covered by private health insurance. I have experience with implementing the universal health programme from my time as mayor of Surakarta and governor of Jakarta, and I remain confident about our national targets. Generally speaking, the government is still optimistic about our plans for universal health coverage by 2019, and we will continue to work in this direction going forward.

What are the goals of the so-called Revolusi Mental, and how do you plan to make this change?

WIDODO: I want to encourage the values of tolerance, nationalism, pluralism, morals, ethics and respect through better education for the people. More importantly, I want to instil a culture of productivity, rather than a society merely based on consumption. This is an important aspect of our Revolusi Mental programme.

We understand that domestic consumption is an engine for economic growth. What we want is to add a mentality of production, whereby local industries will be able to process our abundant raw materials into finished and semi-finished products. Of course, to achieve this we need more investment in industry and technology, as well as strong manufacturing capabilities and the kind of human capital that comes from proper training at vocational and polytechnic schools. This is also why we want to build power plants to generate 35,000 MW by 2019, as we understand that the industrial growth will require a much greater use of energy.