President Susilo Bambang Yudhoyono: Interview

Interview: President Susilo Bambang Yudhoyono

What are the primary pillars of the Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) through 2025?

SUSILO BAMBANG YUDHOYONO: The MP3EI was launched to enable Indonesia to facilitate economic growth over the next 15 years. The plan expects economic expansion at an average rate of 7% a year to become a $4.5trn economy by 2025. With the spirit of discarding the “business-as-usual” paradigm, the MP3EI is a long-term development plan that will spur employment creation by driving investments, synchronise and consolidate the government’s action plan with the real estate sector and cluster economic growth centres that are consistent with each region’s unique strengths. Indonesia is the world’s largest archipelago with over 17,000 islands, and although we are blessed with a wealth of resources, there is an abundance of untapped potential.

MP3EI serves the purpose of improving the economic and social development in designated regions through a well-planned development programme. It is intended to accelerate the development of designated regions to catch up with the level of that seen in Java and Sumatra. This will be achieved through the six economic corridors that have been deemed to be the country’s “growth centres”. The programme is based on the premise that each of these corridors can propel its own regional economies through clustering, as well as operating in areas with a distinct comparative advantage. Priority sectors for investment are industry, mining, agriculture, marine, tourism, telecommunications, energy, infrastructure and regional development.

In addition to the development of the six economic corridors, the MP3EI also aims at improving Indonesia’s connectivity. This is of paramount importance in our mission to unleash the real value of Indonesia. I have to admit that poor infrastructure is one of the most significant deterrents to job-creating investment and remains a significant challenge to competitiveness.

Connectivity refers to both hard and soft infrastructure development. An effective roll-out of projects will be essential in reducing the economy’s entire cost structure, which would create synergies between growth centres and realise equitable access to services. This will be significant for business and development. Our motto is “locally integrated, globally connected”.

Indonesia’s large and youthful population will augur well for economic activity and future productivity, which is the primary reason why we seek to synchronise human development programmes, improve education and invest in the required time and resources it takes to harness our most precious resource – human capital.

The acceleration of our scientific capability and innovation is key to enhancing Indonesia’s competitiveness.

We seek to achieve this by raising the quality of education through incentives and an increased education budget. We base a big part of MP3EI on public-private partnerships. The government stands ready to work closely with state-owned companies and private businesses on numerous projects. I welcome and encourage participation of investors to realise the MP3EI.

Indonesia has accomplished much in the last 13 years, from achieving democratic transition to withstanding financial crises and natural disasters. It is evident that Indonesia has shown remarkable resilience and adaptability in the face of ever-changing global challenges. The policy directions outlined in the MP3EI will guide us towards achieving our development goals.

What measures are being taken to move toward a legal system that meets international business standards as a means to increase competitiveness?

YUDHOYONO: Of utmost importance is the need to adhere to the universal principle of equality before the law, without which, no credible legal system can be built. A strong legal system and a solid rule of law will allow not just businesses, but societies to flourish.

Meeting international business standards is what Indonesia strives for. My government devotes tremendous efforts to ensure legal certainty, combat corruption and minimise inefficiencies caused by bottlenecks in the bureaucracy. Our success in overcoming these challenges will increase our global competitiveness.

We constantly work to detect and tackle loopholes that impede business opportunities. Indonesia also continues to combat graft. My administration has zero tolerance for corruption. We are in the process of reforming our judicial system, with considerable advances in recent years. The Corruption Eradication Commission has been prolific in their investigations of graft, with notable successes since its inception.

How will bureaucratic capacity at both the central and regional level be improved to increase efficiency and cooperation among ministries?

YUDHOYONO: Bureaucratic reform and good governance are key components of economic development. We are working to improve professionalism, and to instate and uphold a system of meritocracy. To effect change, we apply a system of reward and punishment. Nevertheless, this cannot be achieved overnight.

After a long period of autocratic rule, Indonesia underwent a massive nationwide decentralisation effort starting in 1999, whereby 33 provinces and 450 regencies were given greater authority over how their respective regions were managed. Given the massive scale of this undertaking, a heightened level of policy coordination between central and local governments became essential. I have attached particular significance to inter-ministerial coordination, as well as coordination between central and local governments. I stress the importance of inter-agency modalities in tackling matters that are multi-faceted and multi-layered. My coordinating ministers and Indonesia’s vice-president are also engaged intensively in these efforts.

What events have characterised Indonesia’s foreign policy in 2011? How can the country bring its development experience to bear on global events?

YUDHOYONO: The year 2011 has been very eventful for Indonesia in terms of foreign policy activities. First, Indonesia is the Chair of the ASEAN. With such a position, Indonesia is striving to consolidate the ASEAN community by 2015. We have invested intellectual as well as political leadership to achieve these goals. We have convened two ASEAN Summits in 2011.

Indonesia also hosted the East Asia Summit. We inaugurated the participation of the US and Russia for the first time. Under this regional forum, Indonesia hopes to build a robust and inclusive regional architecture.

Apart from ASEAN and the East Asia Summit, Indonesia has hosted many important international events, such as the World Economic Forum on East Asia, the Overseas Private Investment Corporation Conference, the Business for Environment Summit and the Forest Conference. I believe the decision to hold such important events in Indonesia reflects our significance in the world’s economy. Moreover, by hosting such events, Indonesia offers the participants a range of economic opportunities, including the forging of partnerships.

At the G20 Summit in Cannes, Indonesia brought into discussion the issues of development and pressed for a reformed global financial architecture. These issues are highly important to developing countries.

There remains significant downside risks to the future health of the global economy. However, Indonesia in particular has demonstrated remarkable resilience throughout the global debt crises. Investments have so far grown 20.9% from the previous year, and Indonesia’s economy is on track to grow 6.5% this year.

I have been following closely the recent developments in the Middle East and Northern Africa, and do hope that the reform process will result in a peaceful political solution. Democratic transitions that meet the expectations of the people will guarantee stability.

Indonesia experienced a democratic transformation 13 years ago, so it is always willing to share with other nations its own experiences. Nevertheless, I strongly believe that every country should cultivate its own homegrown democracy, as there is no such thing as a one-size-fits-all path to nationhood and statehood.