UPDATE INDONESIA : VIBRANT DEMOCRACY, EMERGING ECONOMY, CRUCIAL CARBON SINK

MAIN MENU

UPDATE INDONESIA : VIBRANT DEMOCRACY, EMERGING ECONOMY, CRUCIAL CARBON SINK

UPDATE INDONESIA :

VIBRANT DEMOCRACY, EMERGING ECONOMY, CRUCIAL CARBON SINK

SPEECH BY
HIS EXCELLENCY
DR. SUSILO BAMBANG YUDHOYONO
PRESIDENT OF THE REPUBLIC OF INDONESIA
BERLIN, 15 DECEMBER 2009

Bismillahirrahmanirrahim
May God''s Peace be Upon Us

Ambassador Firtjof von Nordenskjold
Excellencies,
Ladies and gentlemen,
Dear friends,

Thank you Ambassador for your kind introduction. If you could only say those nice things/ during my recent re-election campaign.

I am very pleased to be here. I wish to thank the German Council on Foreign Relations for organizing this event. And I am pleased to convey to you the warm greetings of 230 million Indonesians whom I represent here today.

Before all else, let me say that I just had a very good discussion with Chancellor Angela Merkel. I have met her on a number of occasions – mostly international forums – and I find her to be a very impressive and creative leader. We discussed a wide range of bilateral issues – trade and investment, education, technology, forestry and climate change --and we agreed to strengthen and elevate our bilateral relations.

We also discussed Copenhagen –how can we not ? We both are determined to ensure the success of the COP-15 which is going to be my next stop after Berlin. Like the climate conference in Bali in 2007, Copenhagen is going to be a tough deal to strike. But with over 100 leaders gathered there/ and with a determination to success. I am hopeful that we CAN reach a new global climate consensus and a good political agreement in Copenhagen.

In my view that agreement would have to bring everybody on board/ with no one opting out. That agreement would have to deliver on all the Bali building blocks –including mitigation, adaptation, technology sharing and financing. That agreement would have to be a stepping stone for a comprehensive and detailed climate treaty, that would be completed in 2010. And that agreement would have to produce a global climate regime that would keep average world temperature to within 2 degrees centigrade.

Ladies and Gentlemen
I have been asked to brief you about Indonesia.

I will cover three major topics : one, on the state of Indonesia’s democracy. Two, on our being an emerging economy. Three, on our tropical rainforests which is crucial as the planet’s indispensable carbon sink.

These three topics in some measure represent how Indonesia has been transformed –politically, diplomatically, economically-- in recent years. They also form part of our international identity : things that define our place, our relevance and our contributions in the world community.

First/ about democracy.
As you know this is a very big year for Indonesia’s democracy. We held two major free and fair elections: nation-wide Parliamentary elections in April and Presidential elections in July. It was an enormous undertaking: some 128 million Indonesians cast their votes, an 84 % voter turn-out, a very high turn out by any standard.

This is our third election since the "era of reformasi" began in the late 1990’s. If, as political scientists like to say, a country’s democratic transition can be judged by its ability to pass 2 peaceful elections and peaceful change-overs then you could now comfortably say, that Indonesia’s democracy has come a long way and indeed has achieved a point of no return.

A recent survey found that some 88 % of Indonesian respondents despite their different political views believe that the nation is on the right track. This means that regardless of whatever criticism they may have on the Government or political parties they have very high confidence in the system in the merit and value of democracy, and that is the unmistakable mark of a maturing democracy.

Indonesia’s recent development is a surprise to some – an unlikely story. It is generally known that Indonesia is difficult country to govern with over 17,000 islands over 3 time zones, hundreds of ethnic groups, and a difficult historical path. There are those who believed that Indonesia could not withstand the various forces and factors pulling it apart from inside and outside the country. They point to the fact that separatist rebellions, communal conflicts, economic crisis had nearly paralyzed us.

Perhaps.

But the story Indonesia is the story of survival against the odds. A story of a resilient people who keep bouncing back no matter what hit them.

Today, 10 years after reformasi, Indonesia is more united/ more dynamic and more stable than ever. Peace in Aceh and Papua. Recovery from the tsunami. Stable Government. Successful decentralization. We have become the world’s third largest democracy, after India and the United States. And this year, despite the fact that many economies are experiencing negative growth, our economy is expected to grow 4,3 % -- the third highest in Asia after China and India.

Indeed, in recent years, Indonesia has undergone a “quiet revolution.” In the last 5 years, unlike before, all the Governors, Regents, mayors, and local Parliamentarians throughout Indonesia have now been directly elected by the people. In other words, democracy has broadened and deepened. This has fundamentally changed the Indonesian political landscape, turning the pyramid upside down. And this quiet revolution happened in a very peaceful, orderly way, without creating chaos or bloodshed in the streets.

Indeed, I think the term “remarkable Indonesia” which was the central theme of recent advertisements in CNN and international stations, adequately describe my nation.

What is the secret ? Well, perhaps there is a hidden hand of history at work – pushing us in the right direction, lifting us when we are down, guiding us in difficult times.

But I think, much of it has to do with our ability to reinvent ourselves.

We Indonesians have, on many historical occasions, been called to adapt and change our worldview.

We got rid of colonialism and put in place an egalitarian society.

We got rid of feudalism/ and adopted embraced emancipation.

We got rid of parochialism and adopted multi-culturalism and tolerance.

We got rid of authoritarian tendencies and embraced democracy and human rights.

We are now trying our best to get rid of corruption from our national system, an effort that has been described as the most aggressive campaign in our history.

The key here is our ability to welcome and pursue change, rather than resist it. And if you ask me/ I think this “adaptability” holds the key to success/ to all the countries that are trying to redefine their place in the new world of the 21st century.

Another key ingredient of our transformation is our ability to change the system. For too long/ we relied on political systems that relied on powerful figureheads and when the figureheads fall/ the system came crashing down with them.

This was not healthy.

In the last 11 years, Indonesians focused on building the system, irregardless of who was the leader. We strengthened our national institutions. We removed restrictions on political parties while making politicians more accountable to their constituents. We reformed our laws, and established free press and freedom of associations. We abolished oppressive laws. We took the military out of politics.

We established a system of checks and balances. We promoted good governance and transparency.

Along the way, of course, we made many mistakes. But we learned from the mistakes/ and we kept our eyes looking forward/ not backward. And in contrast with the past, as in the 1960’s when “politics were supreme” or in the 1970’s when “economics were supreme” this time: it is the law that is supreme. This has made our democracy much more stable, predictable and sustainable.

I call this a “stake-holder democracy” where every citizen can feel that he or she is part of a democratic system/ and has a stake in its success.

And this brings me to another to our success: our unyielding faith in the Indonesian people. This is NOT a matter of rhetoric, it is practical politics.

In the Indonesian context for so long politicians tend to have a patronizing view of the mass: that they were not educated enough, not informed enough, they are not used to democracy, they are too poor to make sound political choice, they are too distant to exercise effective political participation.

What we have refreshingly found indeed is the opposite : despite the ups and downs of the country’s fortunes, the people would not waver in their belief in democracy would not retreat from reforms, would not let go of their hope, and would continue to exercise their rights based on good judgment. It proved that the maturity of our democracy owes much to the maturity of our people. It is the people who give life and substance/ who shape and advance our democracy. It is they who are the “hidden hand” of our democratic development.

Indonesia’s transformation is far from complete. Democracy is a never-ending work. But we are pleased/ that we in Indonesia have achieved something important: to finally connect democracy with stability. This is important because in the 6 years between 1998-2004, we had 4 Presidents come and go. That is no longer the case today : my last government lasted a full five-year term, from 2004-2009/, I expect the present Government to have the same life span.

The emergence of Indonesia’s stable democracy is good not just for Indonesia, but also for the region and for the world. This is because Indonesia is the largest and most populous country in Southeast Asia/ and because Indonesia also has the world’s largest Muslim population –there are more Muslims in Indonesia than in the entire Middle-East. Indeed, we are proud of the fact that in our country, Islam, democracy and modernity grow together easily and harmoniously. This is why we believe Indonesia can play a strategic role in world affairs : to bridge between Islam and the west/ to promote moderate Islam within the Islamic world, to promote tolerance and harmony among civilizations. It is a challenge which we relish in.

Indonesia as an Emerging Economy

Ladies and Gentlemen,
Let me now talk about Indonesia as an emerging economy. Look, this is rather new to us. In the 1960s, we were trapped under massive poverty, hyperinflation, economic mismanagement, under investment/ low production and low growth. In the 1970s, we experienced high economic growth, one of the “Asian miracles”. But this was based on shifting sands and rampant corruption, collusion and nepotism. Then, we had the financial crisis. We were probably the worst hit among other Asian countries with the economy contracting by 13 %.

But then something happened. Not only did we get the politics right; we also got the economics right. In the early years of reforms, our growth hovered around 2 to 3 %, especially during the political crisis. Then, our economy slowly sped up. We pursued prudent financial and banking system, maintained macro economic stability and promoted legal and bureaucratic reform. We made bold decisions to cut fuel subsidies which was politically dangerous and socially painful but economically necessary.

The results?

Last year, our economy grew by 6,1 %, the highest since the crisis. Our trade crossed the USD$ 100 billion mark. Our national budget reached 1000 trillion rupiah, the highest in history. Our Rupiah has been stable, at one point one of Asia’s strongest currency. Our stock market is among the 3 best performing in Asia. Our credit rating is at its best since the crisis. Our debt to GDP ratio is now at 33%, the lowest in history. Our reserves is also at its highest in history. We achieved self-sufficiency in rice. We have a large and growing middle class with higher purchasing power, that is the key driver of Indonesia’s GDP growth. We are launching the most aggressive anti-poverty program in history – some 70 billion rupiah were allocated for poverty alleviation programs.

While other economies slipped into recession, Indonesia was one of a handful of countries that continued to grow. As I said earlier, we expect a positive growth rate of around 4.3% this year, and we are targeting a growth rate of 5 - 5.5% next year.

Best of all, we did not have to chose between politics and economics – between democracy or growth.

No. We chose both. We gained political development/ as well as economic development. Not one at the expense of the other.

Indonesia indeed is a different country now. Newsweek recently called Indonesia “the next India” –whatever that means... but it sounds good to me! Time magazine called our country “a political success story.” Another writer has called Indonesia “a pivotal state.” And investors are now talking about BRIICS – Brazil,Russia, India,Indonesia, China and South Africa. And of course, Indonesia is now a member of the G-20 which has become the premier forum for international economic cooperation.

Call us what you will, but Indonesia is a country whose time has come. We are a vibrant democracy, with a promising economy, with abundant natural resources, and a dynamic population. And of course great food and amazing beaches. And, well better weather...

As one of the emerging economies, in fact we are number 19 in terms of size. Indonesia continues to play a contributing role in the reforms of the international financial architecture as a member of the G-20. We are also the largest country in Southeast Asia and play an active role in the regional frameworks such as ASEAN, East Asia Summit and APEC.

We would like to have closer and deeper relationship with the EU, in particular with Germany, and together we can find win-win ways to grow together.

Germany is Indonesia’s largest trading partner within the EU. In 2008, our total trade was US$ 5.5 billion, with Germany being our second largest export market and the largest source of our imports in the EU. Germany is also an important investor in Indonesia in the automotive, industrial, machinery and chemical products.

There is a great deal of potential for the cooperation between our two countries to grow even more.To continue on a sustainable growth path, Indonesia will need more investments in almost all sectors – infrastructure, energy, and agriculture, and need to revitalize our industrial sector.

One very important area of cooperation that we have agreed on, and one where Germany is a leader, is the area of renewable energy technology – this is a win for business for the environment and climate change and for the people. The areas of cooperation and business opportunities cover low carbon emission energy, efficiency from conversion and utilization of geothermal energy, bio fuels, fuel cell technology and gasification of coal.

We certainly welcome your participation in our national target to increase renewable energy mix from 4.3% in 2008 to 17% in 2025 in our national energy use. In this scheme, biofuel and geothermal will each account for 5% and the rest contributed by biomass, hydro, wind, solar and liquefied coal.

This brings me to a very important topic that Germany and Indonesia share an equally important interest and commitment – Climate Change and forestry.

Indonesia : Crucial Carbon Sink

Let me begin with this : there is no machine made by man that can absorb the greenhouse gas in the atmosphere. The only thing that can do that for now is the trees/ the forests. And Indonesia has plenty of them.

We are blessed with the fact that we not only have the world’s largest archipelago/ spread over 17,000 islands but also that we have one of the largest tracks of tropical rainforests in the world.

These rainforests are a critical part of the solution to global warming. Mitigation is only half of the picture; the other half is preserving and expanding the carbon sinks. I believe that the next global climate regime must have a very strong forestry component in it. And because for much of the forests in the industrial countries had been cut down/ the hope now hangs on the developing nations that have tropical forests, including Indonesia.

Protecting these forests – the lungs of the earth – is a top priority for my Government. Protecting our forests is a key to low carbon development path.

Indonesians are earth-loving : our whole culture and way of life revolve around caring for nature – the land, the forests, the seas and rivers.

Thus, we have cracked down very hard on illegal loggers: hundreds of illegal loggers are now in jail and on trial for their activities. Government officials who are complicit in providing unlawful license to clear forests/ are tried for corruption. We have made a short/ medium and long-term plans with the aim to manage/ conserve and expand our forests. Starting next year, we will plant trees in areas as covering 500,000 hectares each year. Our plan is for our rain forests to absorb some 1,31 giga ton of Co2 by 2020/ and this will enable us to reduce emission by 26 % from business as usual by 2020/ or even by 41 % by way of international cooperation.

In recent years, I have also launched a nation-wide “one man one tree” program where we plant some 200-300 million trees annually. I am personally leading a campaign to spread 400,000 seeds of Trembesi – or “rain tree” - to each province. The Trembesi tree can grow to a diameter of 30 meters in several years, and can absorb 28 tons of carbon dioxide per year.

A key concern, nationally and regionally/ is the annual forest fires in Kalimantan and Sumatra and Riau, which is a troubling social/ economic and regional problems. It is part of the reason that at one point/ Indonesia’s greenhouse gas emissions rose dramatically. But we have made good progress in reducing these yearly forest fires/ as can be seen in the declining rates of hotspots in recent years. I commend the work of Indonesian provincial Governors, many from rain forest provinces, who are working hard for low carbon development, who are here with us today. Can I ask them to stand up to be recognized ?

Preserving the forests requires political will by the Government, but also international cooperation. That is why Indonesia/ Brunei and Malaysia are cooperating in the Heart of Borneo program to conserve approximately 220,000 km2 of rainforest - almost one third of the island - through a network of protected areas and sustainably managed forest. Indonesia has also initiated the Forestry 11 process/ to mobilize the support of countries with the largest tracks of tropical rainforests in Asia, Africa and Latin America/ this will ensure that the forestry nations are not taken for granted/ but indeed can get a fair deal and adequate benefits in their efforts to preserve their forest covers.

This is important : the rainforests nations need to be incentivized to do this. They should not only be incentivized for reforestation and aforestation/ but also for avoided deforestation – for NOT cutting their forests. We must introduce a new logic to forestry management : that it is more profitable to keep the trees up, than to cut them down. This is what is called the REDD plus scheme.

The problem is that the carbon market is still at very early stage, and will not mature for several more years. That is why I appreciate the work initiated by the Prince of Wales, in the Informal Working Group on Interim Finance for REDD (IWG-IFR)/ that aims to provide interim funding for the rain forest nations. The Group recently reported that/ a 25% reduction in annual global deforestation rate is achievable by 2015/ if finance of some 15 to 25 billion Euros for the period 2010-2015 is made available.

Whatever the mechanism, it is clear that forestry will be a key part of the next climate regime/ and part of the future carbon market.

So these are my thoughts on these topics.

Of course, I do not intend to paint a rosy picture. We do face mounting challenges.

On democracy, our challenge is how to balance freedom with rule of law. We also face the uphill battle to promote good governance, and to intensify our anti-corruption measures.

On economy, we are confronted with the task of generating the local economy. We also need to improve intra-state connectivity to ensure that regional economies are integrated. We have an enormous need for infrastructure development. And we need to promote reforms to ensure better business climate for all.

On climate change we need to raise awareness on global warming/ and all its attendant consequences. We need to mobilize the regional governments and local community. We also need to promote twin objectives for our forests : to promote development and tackle poverty and to curb global warming.

I hope you appreciate that/ these are great challenges/ but we are up to meet them. And in meeting these challenges we want to be a stronger partner for Germany. Germany is held with high regards in Indonesia. Indonesians admire the German quality of efficiency, no non-sense attitude, fairness, hard work and their extraordinary engineering prowess.

To conclude, I would like to say that we need more Indonesian students coming to Germany – there are not enough of them. We need more German business coming to Indonesia – there are not enough of them. And if they come, I am sure they will discover what others have found, that your investment will be in good hands, and your money will grow.

I hope to see you in Indonesia.

Once again, thank you for being here.