Medan, Indonesia – Indonesia stands on the “pinnacle” of worldwide management and its financial system is robust sufficient to face up to international headwinds, Indonesian President Joko “Jokowi” Widodo has stated in an annual deal with to parliament.
Hanging an optimistic tone forward of Indonesia’s 77th independence day on August 17, Widodo stated on Tuesday that the nation’s financial fundamentals stay sturdy “within the midst of world financial turbulence” and as “disaster after disaster haunts the world”.
Addressing the problem of rising costs, the Indonesian chief stated inflation had reached 4.9 p.c in July, in contrast with 7 p.c throughout the Affiliation of Southeast Asian Nations (ASEAN) and 9 p.c in developed nations.
Widodo stated the Southeast Asian nation has additionally seen its stature develop on the worldwide stage because of its ongoing presidency of the G20 and subsequent 12 months’s chairmanship of ASEAN.
“It signifies that we [are at the] pinnacle of world management,” stated Widodo, who sported a conventional moss inexperienced and gold Paksian outfit from the Bangka Belitung islands.
Deni Friawan, an financial researcher on the Centre for Strategic and Worldwide Research (CSIS), described the speech as “very optimistic and assured”.
“This optimism is nice for inviting public participation, nevertheless it may also be harmful and there’s a concern of overconfidence,” Friawan instructed Al Jazeera.
Friawan stated that whereas Indonesia’s financial fundamentals look like sturdy in contrast with another nations, the image has been distorted by authorities interventions to regulate steep rises in commodity costs.
“Inflation and trade charges are maintained presently, however the price of doing so can also be costly,” he stated. “Inflation is low as a result of we don’t make changes to the value of gas however power subsidies have risen to IDR 502 trillion ($34bn).”
Like a lot of the globe, Indonesia has confronted provide chain points attributable to a mix of things together with the Ukraine struggle and excessive shopper demand following the COVID-19 pandemic.
In his speech, Widodo stated Indonesia’s rising worldwide standing prolonged to rising curiosity in its downstream industries, which contain the processing of plentiful uncooked supplies equivalent to crude oil and nickel to permit the export of costlier completed merchandise.
Widodo stated the Indonesian financial system grew 5.44 p.c within the second quarter of 2022, with a surplus of about IDR 364 trillion ($24bn).
Metal exports reached IDR 306 trillion ($20.7bn) in 2021, an 18-fold enhance in contrast with 2016, and are projected to succeed in IDR 440 trillion ($27bn) by the tip of 2022, the Indonesian chief stated.
Friawan, the CSIS researcher, stated the federal government’s concentrate on downstreaming has had debatable outcomes.
“The president solely sees the success of downstream nickel from the standpoint of accelerating funding and metal exports, however not from rigorously calculating the added worth that Indonesia really will get,” he stated.
“Take into accout, having quite a lot of pure assets doesn’t imply that Indonesia will be aggressive for industrial and manufacturing manufacturing from the enter of pure assets. To be able to be aggressive, you additionally want supporting know-how, abilities, capability and financial system of scale.”
Widodo additionally referenced his legacy undertaking of Nusantara, Indonesia’s proposed new capital metropolis in Borneo. The undertaking, which goals to boost 80 p.c of its funding from non-public considerations, has been controversial, with some critics saying it should result in the displacement of Indigenous peoples and will centralise energy in methods that could be unconstitutional.
“What’s attention-grabbing for my part is that Jokowi stays dedicated to finishing up this massive undertaking amidst the uncertainty of the financial state of affairs, each inside and out of doors,” Siwage Dharma Negara, senior fellow at Iseas-Yusof Ishak Institute, instructed Al Jazeera.
“The president stays optimistic about our financial capability to rise from the pandemic whereas nonetheless advising that we have to be vigilant and cautious concerning situations which can be very unsure.”