[Transcript] Interview with Former Minister Chatib Basri and Mari Elka Pangestu on Indonesia’s Economic Future

The Interview is Taken by: Australia – Indonesia Center, Indonesia Project and Australian National University



Transcribed by: Indra Gunawan (27/6/18)
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Opening by Helen Brown (interviewer):

So we are here in Canberra, and we are about to catch up with Mari Pangestu, a former ministry of trade and also tourism and the creative economy of Indonesia and former finance minister Chatib Basri. These two are also well-known economists, we really came to talk to them about innovation between Australia and Indonesia, why it’s so important and also why it’s so important now at this point in the economics of both countries. Chatib Basri and Mari Pangestu are also co-conveners of the ANU-Indonesia Update[1] where we can find out more every year about what’s actually happening in Indonesia.

Helen Brown     : I just perhaps start with your part. Could you [..] to me the economic situation for Indonesia at the moment?

Chatib Basri      : Well, I think I would say that Indonesian economy is at the cross road at this moment because the resource booming is over. And we cannot continue to maintain the cheap labor strategy because we cannot compete with Bangladesh because their wages is only 1/3 compare to us. So the only way move into the next stage is to improve the quality of human capital and also supported by the innovation and if you look at our export, 60% is mostly energy and commodity-related, so the role of this innovation, the R&D will become a very important for the future.

Mari Elka         : Ya, ya. I mean that’s definitely where we are now, cross-road, right. Diversify the economy from commodity-based economy and we recognize that we have to go to the next stage of our economic development. So it’s also not just industrialization, export-oriented industrialization as of the past. I think we need to address, modernizing our services sector and that includes tourism that includes the modern services that will make us more efficient - the whole economy more efficient and it’s also about innovation and creativity. And this is actually an area where, you know, with Australia, given what I know, I’ve been following the Indonesia – Australia CEPA Negotiations[2], I think one area that has been identified is actually vocational education, capacity building – vocational education, so like what he said we need to build that part human capital. The skill-based is gonna be needed for an innovation creative-based economy, is going to be different from the past. Plus the fact that we have this huge transformation of technology that can be an opportunity but it also has a downside if we can’t bring the people along.

Helen Brown     : The president is focusing on tourism as one of the area [..] that you mention than your former tourism minister. How important is it do you think that a country like Australia collaborate with Indonesia at this point, you call it as critical point, how important is it to collaborate right now on helping with that vision do you [..]

Mari Elka             : I think, I would say we are two great countries which are neighbors to each other but yet the economic interaction between us is so low, you know. And we are big country, we have a huge domestic market, so it’s more actually “why is Australia not so engage with Indonesia?” a kind of question. And I think that’s actually where we should see the opportunity for Australia-Indonesia to cooperate, not just in the bilateral [sense], but how we can actually make each other more innovative, more competitive to service the regional market, not just the bilateral aspect.

So I think on tourism, let’s just put it on human capital as a beginning, I think besides tourism, I always thought health and education are two other sectors that Indonesia and Australia can really benefit from each other. And this is actually a sort of thinking ahead that’s probably that also the two areas. Yeah, the president is also very concern about health and education. So I think it can be combined very nicely. And tourism, to me, is always really linked to creative economy. It’s your film industry, it’s your all these creative industries that are actually Indonesian-based, sorry, Australia-based, that are [these] work platforms, one is called 1999 design, and one is called freelance which are Australian-based and which Indonesian designers are actually a member of this platform, so it’s already happening despite what the government does and does not do.

Chatib Basri          : And if I may add, I completely agree with Mari regarding this, you know, education and health. Because if you look at Indonesia, one of the our potentials is about the young population and also the rising middle class. And it’s typical of country with the rising middle class, they are talking especially about the good quality of education also about health. So I think both countries; Indonesia and Australia, if we can work together on those two issues, that would be very useful to both countries.

Helen Brown          : As we heard, the [..] presidential election coming up, we’ve got a slowing growth [..] at the certain point. That [back] the question is “Do you think Indonesia will be opened to innovation and change and things which are little bit difficult, or will be a little bit more tricky to implement this thing at this point?”

Chatib Basri         : Well, first of all, I have to say that 5 percent is not bad at all compared to American simply [..] to this area. And for the second one, like it or not, it is inevitable that we have to move into the need for innovation. Because we cannot continue to, you know, keep our economy like only on the resource-based, ya. So, I think despite all this process is not always easy, but definitely we need to move into that direction.

Mari Elka                : Well, if I could add, I think, you know, we have become a sort of if you like a normal country, that, you know leading [..] to election [since] always difficult time to use up your political capital to undertaken your bold reforms. And so I think we can just sort of think about how we can actually push for reforms in that kind of world. And I think one answer which has already been talked about within government and also been suggested is to have special economic zones. So if you are not ready to open up your education and health sector quite yet, maybe you can do it in special economic zones which can be more open than the general policy. So I think that one possible direction whether it happens before 2019 or not, that’s something we hope will at least start.

                        And I do think that in areas like tourism, there is less resistant side, I guess. Because in the result of the survey that will be presented later today, it actually shows that Indonesians while they are maybe little bit anti foreign in terms of workers, import products, foreign investments, they are actually very welcoming for foreign [literatures]. So, and I think Australians obviously have an affinity to come to Indonesia. So, that maybe an area where we can really push a lot of cooperation. I think 40% of our cruise ship tourism comes [..] Australia, so that’s already, you know, happening and we can do more and maybe what they call holiday work, is that, ya? So you can actually come here for extended period on holiday but also work and vice versa for Australia, young Australians to come to Indonesia to work. I think those would be good areas to work hard.

Chatib Basri         : [..] I think if I may add on tourism, I think the benefit is immediate for people of Indonesia. And if you look at the stages of the relationship between countries they start with the tourism, and then trade, and then late [..] will be investment. So if we can start with the tourism, that would be something great.

Helen Brown       : And it is [fun] [..] it is called [..] Indonesia update, you both help convenience. Why it is so important to have this event every year?

Mari Elka               : I think it’s really great way for many reasons; one is to really go in-depth into particular issues to get an understanding and analysis. And the most important is to understand “Ok what should be the right thing to do?” or “What should be the recommendation going forward on that particular issue?”, and you know this particular update, we are focusing on the new [normal], the new world, which is so much uncertainty, so many questions to be asked. So I think it is very timely, and I do think this helps actually increase Australia’s understanding about Indonesia in in-depth way. And somebody actually mentioned “Maybe we should have an Australia update in Indonesia”, our ambassador was just saying that.

Helen Brown           : Would you like to say that pak Chatib?

Chatib Basri           : Ya, ya. And I think if I may add one another point is; this is not unique for Indonesia. This new trend, we are talking about this trend of this rising economic nationalism, you know, the issue of sovereignties, happening in many countries in the world, not only in Indonesian. We need to go into, you know, in-depth [..] to get to know about what’s the reasons behind it. And off course, you know, if you are talking about the Australia update, you probably need to have this socially update in Indonesia.   

          
                       

Youtube Link: Former Ministers Chatib Basri and Mari Pangestu on Indonesia's economic future

      

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