1 00:00:05,739 --> 00:00:08,720 Speaker 1: Welcome to Kobe Time, a podcast series on Markets and 2 00:00:08,728 --> 00:00:11,939 Speaker 1: Economies from D BS Group Research. I'm Tambe, chief economist. 3 00:00:11,949 --> 00:00:17,469 Speaker 1: Welcoming you to our 124th episode. We're recording this from Jakarta. 4 00:00:17,479 --> 00:00:21,159 Speaker 1: That's a first for Kobe time. I'm really pleased to 5 00:00:21,170 --> 00:00:25,389 Speaker 1: have with me, Kevin o'rourke, principal PT Reformer Information Services 6 00:00:25,840 --> 00:00:29,780 Speaker 1: for over two decades, Reformasi has provided independent political risk 7 00:00:29,790 --> 00:00:33,869 Speaker 1: consulting related work. The Reformasi weekly newsletter is a must 8 00:00:33,889 --> 00:00:36,900 Speaker 1: read for those tracking Indonesia and I understand that there 9 00:00:36,909 --> 00:00:40,650 Speaker 1: is also a Reformasi dispatch, a weekly podcast that Kevin 10 00:00:40,659 --> 00:00:43,180 Speaker 1: and his team put together, check this out if you 11 00:00:43,189 --> 00:00:46,709 Speaker 1: are interested in all things. Indonesia. Kevin o'rourke. Welcome to 12 00:00:47,000 --> 00:00:47,220 Speaker 1: Time. 13 00:00:47,639 --> 00:00:49,769 Speaker 2: Thank you. Great to be here. Appreciate 14 00:00:49,779 --> 00:00:51,779 Speaker 1: it. Great to see you. It's been a while and 15 00:00:51,790 --> 00:00:53,610 Speaker 1: I'm glad that we actually have some Kobe with us 16 00:00:53,619 --> 00:00:54,970 Speaker 1: to go with our podcast. 17 00:00:55,290 --> 00:00:57,909 Speaker 2: Finally, after all these episodes, you finally get some good 18 00:00:57,919 --> 00:00:58,729 Speaker 2: Indonesian coffee. 19 00:00:58,869 --> 00:01:02,060 Speaker 1: That's right and really, really good stuff. Um Kevin, we'll 20 00:01:02,069 --> 00:01:05,610 Speaker 1: start with the election. Uh tell us about your take 21 00:01:05,620 --> 00:01:07,848 Speaker 1: on the last few months developments, 22 00:01:08,529 --> 00:01:10,419 Speaker 2: right? Yeah, it's uh 23 00:01:11,459 --> 00:01:14,919 Speaker 2: uh it's been a topsy turvy election process. So it's 24 00:01:14,930 --> 00:01:17,989 Speaker 2: kind of a tricky one to explain sometimes because uh 25 00:01:18,000 --> 00:01:21,309 Speaker 2: a lot of aspects are counterintuitive for the incumbent Widodo 26 00:01:21,319 --> 00:01:25,589 Speaker 2: embraced his former rival and tacitly endorsed him. And then 27 00:01:25,599 --> 00:01:28,649 Speaker 2: that sealed the deal for Prabowo Subianto who won a 28 00:01:28,779 --> 00:01:34,080 Speaker 2: very strong mandate because uh he garnered 58% of the 29 00:01:34,089 --> 00:01:36,879 Speaker 2: popular vote in February on a three way race. So, 30 00:01:38,120 --> 00:01:43,610 Speaker 2: uh it was uh dramatic and um but uh Prabowo 31 00:01:43,620 --> 00:01:46,190 Speaker 2: is a figure who's well known to anybody who observes 32 00:01:46,199 --> 00:01:48,339 Speaker 2: Indonesia for 30 years now. And so 33 00:01:49,019 --> 00:01:51,900 Speaker 2: uh his uh his record and um 34 00:01:53,160 --> 00:01:58,250 Speaker 2: uh questions about his background, uh cloud the outlook. 35 00:01:59,650 --> 00:02:02,919 Speaker 1: Let's talk a little bit about how the election was run. 36 00:02:02,970 --> 00:02:05,569 Speaker 1: Uh There's been a lot of talk about the ongoing 37 00:02:05,870 --> 00:02:07,839 Speaker 1: looks of by elections in India, the results of that 38 00:02:07,849 --> 00:02:09,470 Speaker 1: are coming out and it's always, you know, sort of 39 00:02:09,479 --> 00:02:12,350 Speaker 1: touted as the largest election in the world. How complicated 40 00:02:12,360 --> 00:02:15,270 Speaker 1: it is to run across such a big country. Indonesia 41 00:02:15,279 --> 00:02:17,989 Speaker 1: should not be a kick in the cake walk either, 42 00:02:18,880 --> 00:02:23,660 Speaker 2: yeah, this election or in Indonesia's elections are also complex 43 00:02:23,669 --> 00:02:24,570 Speaker 2: and gigantic. 44 00:02:25,758 --> 00:02:29,770 Speaker 2: Um There's a almost total lack of regulation of campaign 45 00:02:29,779 --> 00:02:33,788 Speaker 2: financing and that's the major weakness. Other than that, uh 46 00:02:33,800 --> 00:02:35,919 Speaker 2: I think the election process in Indonesia must be one 47 00:02:35,929 --> 00:02:38,820 Speaker 2: of the best in the world. It's uh far better 48 00:02:38,830 --> 00:02:41,309 Speaker 2: than the US um should be. Uh I think on 49 00:02:41,320 --> 00:02:42,990 Speaker 2: a par with a lot of the, the best European 50 00:02:43,000 --> 00:02:46,830 Speaker 2: democracies that's the, the, the structures and the accountability and 51 00:02:46,839 --> 00:02:49,070 Speaker 2: the transparency and um the, 52 00:02:49,389 --> 00:02:52,788 Speaker 2: the independence, the credibility of the electoral authorities are all good. 53 00:02:52,919 --> 00:02:56,410 Speaker 2: This one was not as good as past elections actually, 54 00:02:56,419 --> 00:02:58,250 Speaker 2: but it was still fine 55 00:02:58,970 --> 00:03:01,910 Speaker 1: talk a little bit about campaign finance. So where does 56 00:03:01,919 --> 00:03:04,388 Speaker 1: money get spent in the lead up to an election? 57 00:03:04,779 --> 00:03:04,940 Speaker 2: Oh, 58 00:03:04,949 --> 00:03:06,039 Speaker 2: everywhere. Yeah. 59 00:03:07,369 --> 00:03:14,589 Speaker 2: Uh parties, candidates uh uh buying uh support and endorsements 60 00:03:14,600 --> 00:03:17,970 Speaker 2: but also simply just handing out envelopes of cash to 61 00:03:17,979 --> 00:03:21,070 Speaker 2: voters on the morning of election day too. And I, 62 00:03:21,080 --> 00:03:23,079 Speaker 2: I really don't think that much of it matters at 63 00:03:23,089 --> 00:03:23,889 Speaker 2: all. 64 00:03:23,899 --> 00:03:28,320 Speaker 1: Right, because the person who won was decidedly far more 65 00:03:28,330 --> 00:03:30,228 Speaker 1: popular than the other candidates. 66 00:03:31,110 --> 00:03:35,139 Speaker 2: Yes. Uh But more fundamentally just because uh the Indonesia 67 00:03:35,149 --> 00:03:41,119 Speaker 2: Indonesian electorate um has historically been the real strength of 68 00:03:41,130 --> 00:03:46,960 Speaker 2: uh democratization. Um literacy and elementary school education is universal here. 69 00:03:46,970 --> 00:03:52,009 Speaker 2: And uh culturally, sociologically, uh the bulk of voters are 70 00:03:52,020 --> 00:03:55,509 Speaker 2: very much uh plugged into what's happening in their community. So, 71 00:03:55,520 --> 00:03:58,940 Speaker 2: participation rates in the election are astronomical uh in the 72 00:03:58,949 --> 00:03:59,949 Speaker 2: neighborhood of 80%. 73 00:04:00,970 --> 00:04:05,410 Speaker 2: Um So the voters are independent minded and, and the 74 00:04:05,419 --> 00:04:07,809 Speaker 2: common saying is if somebody offers money for your vote, 75 00:04:07,820 --> 00:04:09,220 Speaker 2: you should take the money and then vote for the 76 00:04:09,229 --> 00:04:09,750 Speaker 2: other one. 77 00:04:10,929 --> 00:04:13,940 Speaker 1: I have heard that. But in terms of being plugged in, 78 00:04:13,949 --> 00:04:16,589 Speaker 1: I mean, this is a very social media savvy nation. 79 00:04:17,079 --> 00:04:19,510 Speaker 1: How much action do you see on the social media 80 00:04:19,519 --> 00:04:20,630 Speaker 1: space around elections? 81 00:04:20,839 --> 00:04:25,149 Speaker 2: It's growing. Yeah, it's still a television market but uh 82 00:04:26,160 --> 00:04:31,619 Speaker 2: uh the, the social media is growing rapidly so it's 83 00:04:31,630 --> 00:04:32,399 Speaker 2: changing 84 00:04:33,390 --> 00:04:37,079 Speaker 2: and uh that does have effects for sure. Yeah. Um 85 00:04:37,399 --> 00:04:40,709 Speaker 2: And that was beneficial to the uh Prabowo Gibron ticket 86 00:04:40,720 --> 00:04:41,359 Speaker 2: in this election, 87 00:04:42,109 --> 00:04:43,690 Speaker 1: right? Um 88 00:04:44,600 --> 00:04:48,859 Speaker 1: What does this election with a one off win for 89 00:04:49,000 --> 00:04:50,859 Speaker 1: Pyo say about Indonesia? 90 00:04:52,428 --> 00:04:57,890 Speaker 2: Um Yeah, it says that it's a young electorate who 91 00:04:57,899 --> 00:04:59,700 Speaker 2: can't remember Suharto. That's right. 92 00:05:00,579 --> 00:05:03,470 Speaker 2: Uh Because uh Prabowo is the former son in law 93 00:05:03,480 --> 00:05:06,230 Speaker 2: of Suharto. He's still close to his ex-wife Titi, the 94 00:05:06,238 --> 00:05:10,558 Speaker 2: second daughter of Suharto. And uh Prabowo's son is becoming 95 00:05:10,570 --> 00:05:12,719 Speaker 2: a bit more prominent now. It's the grandson of Suharto 96 00:05:13,928 --> 00:05:17,440 Speaker 2: and uh more generally and more importantly, um you know, 97 00:05:17,450 --> 00:05:21,260 Speaker 2: Prabowo conveys a lot of the um tendencies or impulses 98 00:05:21,269 --> 00:05:25,260 Speaker 2: or predilections of not just Suharto actually, but also the 99 00:05:25,269 --> 00:05:25,459 Speaker 2: um 100 00:05:26,320 --> 00:05:29,660 Speaker 2: the president uh who had become an authoritarian ruler uh 101 00:05:29,670 --> 00:05:31,570 Speaker 2: prior to Suharto Sukarno. 102 00:05:32,428 --> 00:05:37,089 Speaker 2: So, uh yeah, I feel that the electorate maybe has 103 00:05:37,100 --> 00:05:41,450 Speaker 2: been taking democratic principles for granted. And I think that's 104 00:05:41,459 --> 00:05:44,760 Speaker 2: the major significant aspect of this election. 105 00:05:45,230 --> 00:05:45,450 Speaker 1: You 106 00:05:45,459 --> 00:05:46,450 Speaker 1: sound a little worried. 107 00:05:47,070 --> 00:05:50,729 Speaker 2: Yeah. Yeah, more so than um in the past, for sure. Definitely. Yeah, 108 00:05:50,738 --> 00:05:56,308 Speaker 2: because uh there, there's just been um uh 109 00:05:57,630 --> 00:06:03,809 Speaker 2: diminishing of respect for democratic institutions in recent years. Uh 110 00:06:03,820 --> 00:06:07,250 Speaker 2: The incumbent Joko Widodo tried repeatedly to postpone elections or 111 00:06:07,260 --> 00:06:11,179 Speaker 2: extend his term or remove term limits. Uh Those all 112 00:06:11,190 --> 00:06:14,290 Speaker 2: would have required a constitutional amendment and that proved impossible 113 00:06:14,299 --> 00:06:18,299 Speaker 2: because uh Megawati's PD IP was against it. And also 114 00:06:18,309 --> 00:06:21,929 Speaker 2: uh proposed Gina, uh the third largest largest party was 115 00:06:21,940 --> 00:06:22,489 Speaker 2: against it. 116 00:06:23,238 --> 00:06:27,018 Speaker 2: But um Widodo was almost able to do those things. 117 00:06:27,029 --> 00:06:29,339 Speaker 2: Uh And uh what he was able to do is 118 00:06:29,350 --> 00:06:33,179 Speaker 2: manipulate a decision from the constitutional court in October. Um 119 00:06:33,480 --> 00:06:37,659 Speaker 2: specifically the president's brother in law uh manipulated the, the 120 00:06:37,670 --> 00:06:41,339 Speaker 2: rulings from two of the nine justices in order to 121 00:06:41,350 --> 00:06:46,260 Speaker 2: falsely claim that the, the court approved the eligibility of 122 00:06:46,339 --> 00:06:49,519 Speaker 2: Gibran Rakin for vice president. And that was the key 123 00:06:49,529 --> 00:06:50,980 Speaker 2: juncture because um 124 00:06:51,440 --> 00:06:57,079 Speaker 2: attaching Gibron Widodo's son to Prabowo's ticket implicitly endorsed Prabowo 125 00:06:57,380 --> 00:07:01,500 Speaker 2: on the part of Widodo who's phenomenally popular among voters. 126 00:07:01,510 --> 00:07:04,230 Speaker 2: And so from that point on the Prabowo Gibron ticket 127 00:07:04,238 --> 00:07:07,260 Speaker 2: just took off, uh the Prabowo had faced a ceiling 128 00:07:07,269 --> 00:07:10,320 Speaker 2: up until that point, but then was able to cruise 129 00:07:10,329 --> 00:07:11,769 Speaker 2: to a 58% majority. 130 00:07:12,269 --> 00:07:17,089 Speaker 2: Um And now looking ahead Prabowo may have an easier 131 00:07:17,100 --> 00:07:20,559 Speaker 2: time actually using a lot of the tactics and strategies 132 00:07:20,570 --> 00:07:26,029 Speaker 2: of Widodo in terms of uh uh uh arranging political 133 00:07:26,040 --> 00:07:29,609 Speaker 2: um events and dynamics for, for his own benefit. And 134 00:07:29,619 --> 00:07:30,970 Speaker 2: so it raises questions about 135 00:07:31,339 --> 00:07:33,570 Speaker 2: the longer term outlook for democracy, 136 00:07:33,579 --> 00:07:36,140 Speaker 1: right? So let's talk about the outlook, the near term 137 00:07:36,149 --> 00:07:39,929 Speaker 1: outlook in terms of the cabinet makeup uh pro administration, 138 00:07:40,130 --> 00:07:43,980 Speaker 1: how much of an imprint Jokowi staff would have in 139 00:07:43,989 --> 00:07:44,890 Speaker 1: the new administration? 140 00:07:45,739 --> 00:07:50,279 Speaker 2: Uh um Well, uh there will be some uh 141 00:07:51,570 --> 00:07:55,000 Speaker 2: Widodo's popularity has been so important to Prabowo that Prabowo 142 00:07:55,010 --> 00:07:57,339 Speaker 2: is going to need to take account of Widodo uh 143 00:07:58,440 --> 00:08:03,220 Speaker 2: uh for, for a while anyway, Widodo will uh be 144 00:08:03,230 --> 00:08:07,260 Speaker 2: out of power, he lacks a party. Uh Gibron is 145 00:08:07,269 --> 00:08:09,220 Speaker 2: only the vice president and that's very much like an 146 00:08:09,230 --> 00:08:11,769 Speaker 2: American vice presidency with no power at all. 147 00:08:12,489 --> 00:08:16,309 Speaker 2: So Widodo's only real source of tangible political power is 148 00:08:16,320 --> 00:08:18,459 Speaker 2: gonna be via the press and the media in terms 149 00:08:18,470 --> 00:08:22,410 Speaker 2: of uh affecting public perceptions of Prabowo through Widodo's statements 150 00:08:22,420 --> 00:08:25,549 Speaker 2: and the ability to garner headlines and, and make an 151 00:08:25,559 --> 00:08:26,589 Speaker 2: impact on social media 152 00:08:27,399 --> 00:08:29,640 Speaker 2: which is significant. So, so Prabowo is gonna need to 153 00:08:29,649 --> 00:08:33,250 Speaker 2: be able to try to keep Widodo uh on board. 154 00:08:33,260 --> 00:08:36,719 Speaker 2: And so, so there will be some cabinet posts that 155 00:08:36,729 --> 00:08:40,390 Speaker 2: belong to Widodo loyalists. But on the other hand, Prabowo 156 00:08:40,400 --> 00:08:43,359 Speaker 2: seems to be somebody who very much values uh personal 157 00:08:43,369 --> 00:08:46,140 Speaker 2: loyalty to him himself. And so 158 00:08:46,890 --> 00:08:48,669 Speaker 2: uh there's going to be a tension there I think 159 00:08:49,559 --> 00:08:53,750 Speaker 1: and in terms of cabinet makeup, I'm not necessarily asking 160 00:08:53,760 --> 00:08:55,250 Speaker 1: you to make specific, you know, who's going to be 161 00:08:55,260 --> 00:08:57,940 Speaker 1: the finance minister or who's going to be the SOE minister. 162 00:08:57,950 --> 00:08:59,979 Speaker 1: But what kind of people do you think 163 00:09:00,929 --> 00:09:02,950 Speaker 1: probably would appoint? 164 00:09:03,820 --> 00:09:06,900 Speaker 2: Well, uh they come from a few different groups. Uh 165 00:09:06,940 --> 00:09:13,020 Speaker 2: He has a, a fairly sizable family that is uh 166 00:09:13,359 --> 00:09:15,159 Speaker 2: pretty heavily involved in politics. 167 00:09:16,450 --> 00:09:20,329 Speaker 2: Uh politics here, of course, includes business, it's all one. Yeah. 168 00:09:20,359 --> 00:09:22,030 Speaker 2: And uh 169 00:09:22,710 --> 00:09:27,780 Speaker 2: then he has uh still some colleagues and associates and 170 00:09:27,789 --> 00:09:30,489 Speaker 2: um subordinates from the army. 171 00:09:31,250 --> 00:09:33,598 Speaker 2: But th those have dwindled a number a bit. 172 00:09:34,380 --> 00:09:40,280 Speaker 2: So for the past uh 15, almost 20 years now, 173 00:09:40,289 --> 00:09:42,359 Speaker 2: he's really relied heavily on people in his party. 174 00:09:43,229 --> 00:09:51,989 Speaker 2: So um uh Daco Ahmad is the operational chair of 175 00:09:52,000 --> 00:09:55,439 Speaker 2: Prabowo's Party, Karina. So that's gonna be probably Prabowo's right 176 00:09:55,450 --> 00:09:55,950 Speaker 2: hand man. 177 00:09:56,799 --> 00:09:57,929 Speaker 2: And um 178 00:09:58,830 --> 00:10:02,840 Speaker 2: uh Ahmad Muzi and Suyono. Um there's a few different 179 00:10:02,849 --> 00:10:04,640 Speaker 2: people in Gina who are going to be prominent in 180 00:10:04,650 --> 00:10:05,169 Speaker 2: the cabinet. 181 00:10:06,320 --> 00:10:07,049 Speaker 2: Um 182 00:10:08,200 --> 00:10:12,419 Speaker 2: And uh plenty of uh representatives of the security forces 183 00:10:12,429 --> 00:10:16,179 Speaker 2: and uh and Prabowo's own family. Uh And then representatives 184 00:10:16,190 --> 00:10:18,650 Speaker 2: of the parties that have allied with Prabowo and those 185 00:10:18,659 --> 00:10:22,020 Speaker 2: are pretty numerous. So Prabowo intends to enlarge the cabinet. 186 00:10:22,030 --> 00:10:25,900 Speaker 2: I think that's uh designed to broaden the, the the 187 00:10:25,909 --> 00:10:28,789 Speaker 2: number of representatives. And Prabowo always had this penchant of 188 00:10:28,799 --> 00:10:32,419 Speaker 2: trying to uh incorporate as many people as possible is 189 00:10:32,429 --> 00:10:35,409 Speaker 2: the ranks of his party leadership are huge. For example, 190 00:10:37,200 --> 00:10:42,770 Speaker 1: in terms of demographics, Indonesia skews to the young, the 191 00:10:42,780 --> 00:10:45,659 Speaker 1: young people's vote matter a lot. And we have seen 192 00:10:45,669 --> 00:10:48,468 Speaker 1: a few young leaders, you know, come up and some 193 00:10:48,479 --> 00:10:51,239 Speaker 1: of them even ran for election. Would you expect a 194 00:10:51,250 --> 00:10:53,400 Speaker 1: strategy and proposed part to sort of co opt the 195 00:10:53,409 --> 00:10:54,330 Speaker 1: youth of the nation? 196 00:10:55,580 --> 00:10:59,978 Speaker 2: Uh I suppose. So, um yeah, that's been sort of 197 00:10:59,989 --> 00:11:02,789 Speaker 2: a standing strategy for a few administrations. Um 198 00:11:03,690 --> 00:11:06,500 Speaker 2: And uh yeah, that's, that's a role that 199 00:11:07,729 --> 00:11:10,859 Speaker 2: propose running mate. Gibron may be able to help with, 200 00:11:10,869 --> 00:11:11,659 Speaker 2: to some extent 201 00:11:12,440 --> 00:11:13,070 Speaker 2: um 202 00:11:13,849 --> 00:11:16,109 Speaker 2: to the extent that their alliance remains strong. 203 00:11:16,840 --> 00:11:22,059 Speaker 2: Um But it's uh it's, it's easier said than done. 204 00:11:22,070 --> 00:11:24,440 Speaker 2: Um you know, strategies to appeal to the youth usually 205 00:11:24,450 --> 00:11:27,809 Speaker 2: backfire things that uh are not intended to appeal to 206 00:11:27,820 --> 00:11:28,569 Speaker 2: the youth do. 207 00:11:29,809 --> 00:11:33,659 Speaker 1: It's well put. Um I normally talk about domestic policy 208 00:11:33,669 --> 00:11:36,039 Speaker 1: before foreign policy, but I'm going to start with foreign policy. 209 00:11:36,049 --> 00:11:39,239 Speaker 1: It was telling that the first overseas trip probably were 210 00:11:39,250 --> 00:11:43,039 Speaker 1: made after getting elected was to China. Uh How significant 211 00:11:43,049 --> 00:11:43,679 Speaker 1: was that? Yeah, 212 00:11:43,700 --> 00:11:47,159 Speaker 2: that was very significant, very interesting. Um uh What I 213 00:11:47,169 --> 00:11:50,919 Speaker 2: understand there was a standing invitation from Beijing for pow 214 00:11:50,929 --> 00:11:54,400 Speaker 2: to visit and uh he readily took it up before 215 00:11:54,409 --> 00:11:57,159 Speaker 2: even having been confirmed by the Constitutional Court as the 216 00:11:57,169 --> 00:11:58,320 Speaker 2: rightful winner of the election. 217 00:11:59,059 --> 00:12:02,450 Speaker 2: Um He went there with his son, did it uh 218 00:12:02,460 --> 00:12:07,348 Speaker 2: with his aide Zono and a couple former military figures 219 00:12:07,359 --> 00:12:09,739 Speaker 2: are not the foreign minister. I don't think even the 220 00:12:09,750 --> 00:12:10,710 Speaker 2: ambassador was there. 221 00:12:11,330 --> 00:12:14,569 Speaker 2: Uh so and then he met with Xi Jinping himself. 222 00:12:15,599 --> 00:12:19,340 Speaker 2: Um It was a very aggressive move by China. Um 223 00:12:19,349 --> 00:12:21,890 Speaker 2: not aggressive, I should say it was assertive, it was 224 00:12:21,900 --> 00:12:25,020 Speaker 2: a strong diplomacy on the part of China to uh 225 00:12:25,030 --> 00:12:28,390 Speaker 2: move uh adroitly and engage with Pablo. 226 00:12:29,340 --> 00:12:34,190 Speaker 2: Uh and it did signals the high importance that China 227 00:12:34,200 --> 00:12:35,500 Speaker 2: attaches to Indonesia 228 00:12:36,700 --> 00:12:40,530 Speaker 2: Prabowo sees the world in terms of hard power. And 229 00:12:40,539 --> 00:12:43,859 Speaker 2: uh it was significant too that uh immediately after being 230 00:12:43,869 --> 00:12:46,080 Speaker 2: in Beijing, he went straight to Tokyo and met with 231 00:12:46,090 --> 00:12:48,840 Speaker 2: the government of Japan. And again, what I understand is 232 00:12:48,849 --> 00:12:50,590 Speaker 2: that that was the government of Japan that extended that 233 00:12:50,599 --> 00:12:52,669 Speaker 2: offer to him, but it was good that he accepted 234 00:12:52,679 --> 00:12:56,679 Speaker 2: it and that definitely showed a measure of balance. Uh 235 00:12:56,789 --> 00:12:59,200 Speaker 2: He also visited Malaysia on the way back to Jakarta. 236 00:12:59,489 --> 00:13:01,590 Speaker 2: So I think POW is going to want to convey 237 00:13:01,599 --> 00:13:05,710 Speaker 2: an impression of balance in Indonesia's Foreign relations. But in practice, 238 00:13:05,719 --> 00:13:07,460 Speaker 2: I think China is going to have a big advantage 239 00:13:08,159 --> 00:13:11,000 Speaker 1: is that fundamentally different from the Jokowi days or it's 240 00:13:11,010 --> 00:13:12,238 Speaker 1: more of the same. Yeah, 241 00:13:12,250 --> 00:13:15,359 Speaker 2: it's going to be not fundamentally different now but uh 242 00:13:15,369 --> 00:13:20,700 Speaker 2: gradations of change. Yes, one of the economically is is 243 00:13:20,710 --> 00:13:25,108 Speaker 2: where China has the advantage. And specifically, uh I think 244 00:13:25,119 --> 00:13:28,869 Speaker 2: under the Prabowo administration, there's ample concern about standards of 245 00:13:28,880 --> 00:13:33,299 Speaker 2: governance because those have already weakened, they are weakening right now. 246 00:13:33,900 --> 00:13:39,130 Speaker 2: And uh the Prabowo campaign produced no compelling strategy for 247 00:13:39,140 --> 00:13:40,090 Speaker 2: combating corruption. 248 00:13:40,719 --> 00:13:44,460 Speaker 2: Um On the contrary, the only other cabinet post that 249 00:13:44,469 --> 00:13:47,559 Speaker 2: uh proposed Gina has controlled besides his own role as 250 00:13:47,570 --> 00:13:52,630 Speaker 2: Defense Minister has been the Fisheries Ministry which uh had 251 00:13:52,640 --> 00:13:56,570 Speaker 2: a horrific uh export quota scandal in 2020. 252 00:13:57,210 --> 00:14:01,369 Speaker 2: So if governance uh deteriorates, then that tends to be 253 00:14:01,380 --> 00:14:05,799 Speaker 2: advantageous for China because uh countries that are sources of 254 00:14:05,809 --> 00:14:09,000 Speaker 2: investment for Indonesia, other countries that are sources of investment 255 00:14:09,010 --> 00:14:13,569 Speaker 2: tend to have a strong anti corruption uh statutes in 256 00:14:13,580 --> 00:14:16,299 Speaker 2: the US has the F CPA foreign corrupt practices act, 257 00:14:16,309 --> 00:14:18,929 Speaker 2: the UK and the EU have these things too. So 258 00:14:18,960 --> 00:14:21,549 Speaker 2: it ends up being uh on level playing field. 259 00:14:22,729 --> 00:14:26,630 Speaker 1: So let's stay with foreign policy a little longer on 260 00:14:27,299 --> 00:14:31,820 Speaker 1: issues related to where Indonesia stands in ASEAN, where Indonesia 261 00:14:31,830 --> 00:14:35,039 Speaker 1: stands with the US. Uh how you see uh provo 262 00:14:35,380 --> 00:14:37,070 Speaker 1: sort of navigating those areas. 263 00:14:37,880 --> 00:14:40,489 Speaker 2: Uh Yeah, a lot of it is not going to 264 00:14:40,500 --> 00:14:42,460 Speaker 2: be up to him. You know, the US in particular 265 00:14:42,469 --> 00:14:45,150 Speaker 2: is going to potentially have its own crisis and that 266 00:14:45,159 --> 00:14:47,340 Speaker 2: may be a massive distraction for the US. 267 00:14:48,219 --> 00:14:50,950 Speaker 2: Um Depending on the outcome of its election. 268 00:14:52,520 --> 00:14:58,770 Speaker 2: Um ASEAN is something that Prabowo is uh seemingly not 269 00:14:58,780 --> 00:15:03,330 Speaker 2: as enthusiastic about as uh some of his predecessors or 270 00:15:03,340 --> 00:15:06,609 Speaker 2: some of the foreign ministry officials who have been in, 271 00:15:06,619 --> 00:15:08,530 Speaker 2: in office in the past couple of decades. 272 00:15:09,140 --> 00:15:16,539 Speaker 2: Uh What Prab uh heeds is the actual military assets 273 00:15:16,549 --> 00:15:19,900 Speaker 2: that uh countries deploy. This is what he talks about 274 00:15:19,909 --> 00:15:22,349 Speaker 2: uh uh on what he talked about on a near 275 00:15:22,359 --> 00:15:25,770 Speaker 2: daily basis throughout the campaign. So therefore it's the US 276 00:15:25,780 --> 00:15:28,640 Speaker 2: and its allies that matter, it's China that matters. Uh 277 00:15:28,880 --> 00:15:32,619 Speaker 2: but um countries in ASEAN unless so and especially the 278 00:15:32,630 --> 00:15:37,289 Speaker 2: EU is really the um the object of derision. 279 00:15:37,299 --> 00:15:37,840 Speaker 1: That's right. 280 00:15:38,309 --> 00:15:40,659 Speaker 1: Um And it will be interesting as sort of things 281 00:15:40,669 --> 00:15:44,309 Speaker 1: like border adjustment tax come into force, what that means 282 00:15:44,320 --> 00:15:47,690 Speaker 1: for Indonesia's exports and pro actions around that. 283 00:15:47,700 --> 00:15:47,849 Speaker 2: Yeah, 284 00:15:47,859 --> 00:15:48,460 Speaker 1: that's huge. 285 00:15:48,469 --> 00:15:50,039 Speaker 2: Yeah, the, the eu right now is trying to do 286 00:15:50,049 --> 00:15:55,770 Speaker 2: things to uh uh uh address climate change uh for the, 287 00:15:55,780 --> 00:15:57,369 Speaker 2: for the planet. And um 288 00:15:58,530 --> 00:16:00,849 Speaker 2: uh Indonesia could be a beneficiary of a lot of 289 00:16:00,859 --> 00:16:04,210 Speaker 2: these measures because uh Widodo has succeeded in virtually stopping 290 00:16:04,219 --> 00:16:06,640 Speaker 2: deforestation or that had been the case as of about 291 00:16:06,650 --> 00:16:07,510 Speaker 2: a year ago anyway. 292 00:16:08,309 --> 00:16:13,000 Speaker 2: So, uh the measures that uh you know, reward uh 293 00:16:13,010 --> 00:16:17,309 Speaker 2: countries that sell products that avoid deforestation are measures that 294 00:16:17,320 --> 00:16:20,570 Speaker 2: benefit Indonesia. But Prabowo has taken it the exact opposite 295 00:16:20,580 --> 00:16:24,169 Speaker 2: way and regarded it as an affront, basically just using 296 00:16:24,179 --> 00:16:28,750 Speaker 2: um developments internationally and especially regulations from the eu as 297 00:16:28,760 --> 00:16:33,609 Speaker 2: a means to foment domestic nationalist sentiment for his own advantage. 298 00:16:34,309 --> 00:16:39,580 Speaker 1: That's right. So in terms of ASEAN co-operation, uh if 299 00:16:39,869 --> 00:16:41,789 Speaker 1: it is indeed the case that, you know, Provo is 300 00:16:41,799 --> 00:16:46,030 Speaker 1: not particularly enthusiastic about, say an initiative like RSEP, which 301 00:16:46,039 --> 00:16:49,309 Speaker 1: tries to create somewhat of a common market, I would 302 00:16:49,320 --> 00:16:51,869 Speaker 1: have taught that in order to take advantage of some 303 00:16:51,880 --> 00:16:54,890 Speaker 1: of the investments from China that Indonesia in general and 304 00:16:55,049 --> 00:16:57,440 Speaker 1: Provo in particular would be interested in sort of 305 00:16:58,000 --> 00:17:00,150 Speaker 1: making some of those rules binding so that even the 306 00:17:00,159 --> 00:17:03,250 Speaker 1: supply chain in the region can be advantageous to Chinese 307 00:17:03,260 --> 00:17:04,619 Speaker 1: capital or Chinese investors. 308 00:17:05,229 --> 00:17:07,510 Speaker 1: But it seems to me from what you're saying that 309 00:17:07,520 --> 00:17:09,609 Speaker 1: there isn't that much of a strategic thinking around that. 310 00:17:10,060 --> 00:17:13,550 Speaker 2: No, I haven't witnessed that there's no sign of it. No, 311 00:17:13,560 --> 00:17:18,099 Speaker 2: on the contrary, what Prabowo and his team emphasizes aar 312 00:17:18,109 --> 00:17:21,489 Speaker 2: and self sufficiency for not just food but also energy. 313 00:17:22,530 --> 00:17:25,750 Speaker 1: OK. That's a perfect segue to domestic policy. So let's 314 00:17:25,760 --> 00:17:30,290 Speaker 1: talk about food security and energy security. It's striking that 315 00:17:30,300 --> 00:17:34,199 Speaker 1: despite being the third largest producer of rice, Indonesia still 316 00:17:34,209 --> 00:17:38,448 Speaker 1: has to import rice. Um it's relatively secure but it 317 00:17:38,459 --> 00:17:40,989 Speaker 1: seems like you know what, what's happening with climate change 318 00:17:41,000 --> 00:17:44,770 Speaker 1: and no major particular improvement in productivity in the agricultural sector. 319 00:17:44,849 --> 00:17:46,449 Speaker 1: That's an area of worry. 320 00:17:46,689 --> 00:17:50,010 Speaker 1: Um So let's speak in general about food security, but 321 00:17:50,020 --> 00:17:52,750 Speaker 1: perhaps also about sort of rice related issues. 322 00:17:53,380 --> 00:17:58,030 Speaker 2: Yeah. Um yeah, there was an El Nino which depressed 323 00:17:58,040 --> 00:18:00,689 Speaker 2: production a little bit last year. And therefore, there was 324 00:18:00,699 --> 00:18:03,469 Speaker 2: a need to import a little bit and uh other 325 00:18:03,479 --> 00:18:06,989 Speaker 2: countries faced the same predicament. And so there was uh 326 00:18:07,079 --> 00:18:09,459 Speaker 2: upward price pressure for rice and uh 327 00:18:10,560 --> 00:18:16,149 Speaker 2: uh consumers here uh felt the impact of higher rice prices. 328 00:18:16,900 --> 00:18:21,150 Speaker 2: But apart from that, Indonesia has actually been self sufficient 329 00:18:21,160 --> 00:18:24,010 Speaker 2: in rice for quite a while, you know, it's had 330 00:18:24,020 --> 00:18:26,500 Speaker 2: a very high domestic rice price that typically it's been 331 00:18:26,510 --> 00:18:29,489 Speaker 2: much higher than the international rice price. Um 332 00:18:30,550 --> 00:18:34,010 Speaker 2: So this pursuit of food, a Turkey is uh a 333 00:18:34,020 --> 00:18:36,640 Speaker 2: little bit counterintuitive in that sense. Um 334 00:18:37,449 --> 00:18:41,239 Speaker 2: It, it just uh basically reflects um a a real 335 00:18:41,250 --> 00:18:43,369 Speaker 2: lack of confidence in the uh 336 00:18:44,400 --> 00:18:48,020 Speaker 2: the the potential and the reliability of international trade which 337 00:18:48,030 --> 00:18:49,659 Speaker 2: I think is exaggerated, 338 00:18:50,349 --> 00:18:53,439 Speaker 1: right? Uh especially on food, I think there are other 339 00:18:53,449 --> 00:18:56,688 Speaker 1: areas where there is some legitimate concern about how the 340 00:18:56,699 --> 00:18:59,709 Speaker 1: world is turning inward. But I don't think food is one. 341 00:18:59,719 --> 00:19:02,339 Speaker 1: In fact, what we saw with the Ukraine Russia conflict 342 00:19:02,349 --> 00:19:04,750 Speaker 1: is the world did come together very well in balancing 343 00:19:04,760 --> 00:19:09,079 Speaker 1: global supply uh from producers that were outside the Ukraine 344 00:19:09,089 --> 00:19:13,859 Speaker 1: Russia orbit. And also the production from Ukraine Russia undertook 345 00:19:13,869 --> 00:19:15,930 Speaker 1: all sorts of agreements to make sure that there was 346 00:19:15,939 --> 00:19:16,979 Speaker 1: ample supply in the world. 347 00:19:17,290 --> 00:19:22,630 Speaker 1: Um But uh Kevin in terms of energy, both energy exports, 348 00:19:22,640 --> 00:19:26,310 Speaker 1: energy production and the future of fossil fuels. What is 349 00:19:26,319 --> 00:19:28,869 Speaker 1: the thinking likely in this administration? 350 00:19:29,540 --> 00:19:32,938 Speaker 2: Right. Yeah, there's been a real failure of the Widodo 351 00:19:32,949 --> 00:19:35,770 Speaker 2: administration to bring about a transition to renewable energy. And 352 00:19:35,780 --> 00:19:38,459 Speaker 2: now this is impacting Indonesia's competitiveness because a lot of 353 00:19:38,469 --> 00:19:42,079 Speaker 2: the good quality investment is avoiding Indonesia because there's a 354 00:19:42,089 --> 00:19:44,089 Speaker 2: lack of renewable energy that um 355 00:19:44,439 --> 00:19:47,819 Speaker 2: big major blue chip international companies need in order to 356 00:19:48,160 --> 00:19:52,479 Speaker 2: contain their their own emissions profile. So this affects um 357 00:19:52,979 --> 00:19:56,020 Speaker 2: the resource sector but also manufactured exports. Um 358 00:19:57,219 --> 00:20:01,478 Speaker 2: uh And uh there's huge opportunities in Indonesia to to 359 00:20:01,489 --> 00:20:04,989 Speaker 2: realize that this kind of a transition. And uh geothermal 360 00:20:05,000 --> 00:20:09,150 Speaker 2: is uh in particular, the asset that Indonesia can exploit 361 00:20:09,160 --> 00:20:13,670 Speaker 2: much more so than almost any other country in the world. Yeah, exactly. 362 00:20:13,680 --> 00:20:18,290 Speaker 2: It's literally sitting there. Uh But the Prabowo campaign is 363 00:20:18,300 --> 00:20:21,270 Speaker 2: focused instead on growing sugar cane ethanol 364 00:20:21,910 --> 00:20:28,530 Speaker 2: which Prabowo intends to provide for 100% of national fuel consumption. 365 00:20:29,489 --> 00:20:33,680 Speaker 2: Brazil has been working on sugarcane ethanol for 50 years 366 00:20:33,689 --> 00:20:39,510 Speaker 2: and it's uh succeeded tremendously and Brazil uses it for 28% 367 00:20:39,520 --> 00:20:43,050 Speaker 2: of their fuel consumption. So, so Prabowo's promises are not 368 00:20:43,060 --> 00:20:46,770 Speaker 2: credible and uh Indonesia doesn't necessarily have the advantages of 369 00:20:46,780 --> 00:20:51,189 Speaker 2: Brazil and, and uh producing sugar cane. And there's a 370 00:20:51,800 --> 00:20:57,369 Speaker 2: uh project uh unveiled by Widodo that plans for plantations 371 00:20:57,380 --> 00:21:01,829 Speaker 2: in South Papua, which is uh a tricky place uh 372 00:21:01,839 --> 00:21:07,609 Speaker 2: for that. Uh It would probably entail considerable biodiversity loss 373 00:21:07,619 --> 00:21:08,540 Speaker 2: and deforestation. 374 00:21:09,310 --> 00:21:10,329 Speaker 2: So, um 375 00:21:11,310 --> 00:21:15,000 Speaker 2: yeah, it's uh you know, the, the the wrong answer 376 00:21:15,010 --> 00:21:19,250 Speaker 2: to the problem. Indonesia still also remains very much addicted 377 00:21:19,260 --> 00:21:19,930 Speaker 2: to coal. 378 00:21:20,650 --> 00:21:25,180 Speaker 2: And uh that's mainly because of the uh lobbying power 379 00:21:25,189 --> 00:21:28,010 Speaker 2: of the interest that operate the coal fired power plants 380 00:21:28,020 --> 00:21:31,750 Speaker 2: that dominate electricity production. And so the air in Jakarta 381 00:21:31,760 --> 00:21:34,949 Speaker 2: is almost unbreathable. It's very unhealthy, especially for kids. 382 00:21:36,369 --> 00:21:39,449 Speaker 1: Let's talk about that a little more. Uh I saw 383 00:21:39,459 --> 00:21:42,109 Speaker 1: in China over the last decade, decade and a half, 384 00:21:42,260 --> 00:21:45,589 Speaker 1: this sort of bottom up as well as top down 385 00:21:45,599 --> 00:21:48,329 Speaker 1: sort of drive toward green transition. And the bottom up 386 00:21:48,339 --> 00:21:50,589 Speaker 1: was precisely because of what you were saying that the 387 00:21:50,599 --> 00:21:53,359 Speaker 1: air in Shanghai and Beijing was unreadable and people sort 388 00:21:53,369 --> 00:21:55,670 Speaker 1: of revolted against that in the moment, there was even 389 00:21:55,680 --> 00:21:58,750 Speaker 1: the slightest move toward EVs, everybody embraced it. They didn't 390 00:21:58,760 --> 00:22:02,129 Speaker 1: have to like force people to embrace evs and of course, 391 00:22:02,140 --> 00:22:03,550 Speaker 1: the charging infrastructure. And so 392 00:22:03,660 --> 00:22:06,139 Speaker 1: one in China unparalleled to any other nation in the 393 00:22:06,150 --> 00:22:09,099 Speaker 1: world that also helped. And today when I go to Shanghai, Beijing, 394 00:22:09,109 --> 00:22:11,069 Speaker 1: that's the first thing I noticed that both the quality 395 00:22:11,079 --> 00:22:14,640 Speaker 1: of air and the level of noise because electric cars 396 00:22:14,650 --> 00:22:18,119 Speaker 1: are quiet. Indonesia seems to be to your point earlier 397 00:22:18,130 --> 00:22:22,579 Speaker 1: that there is a degree of literacy awareness about what's happening. 398 00:22:22,689 --> 00:22:25,599 Speaker 1: How come we're not seeing major bottom up, push for 399 00:22:25,609 --> 00:22:28,239 Speaker 1: cleaner air and, and green transition? 400 00:22:29,390 --> 00:22:35,520 Speaker 2: Um Yeah, it's a few different reasons, but I think 401 00:22:35,530 --> 00:22:37,129 Speaker 2: this is going to be a primary thing over the 402 00:22:37,140 --> 00:22:40,659 Speaker 2: next uh the course of the next administration because there's 403 00:22:40,670 --> 00:22:41,540 Speaker 2: a middle class that 404 00:22:42,530 --> 00:22:45,750 Speaker 2: does increasingly care about this. And all signs point to 405 00:22:46,209 --> 00:22:49,550 Speaker 2: uh air levels uh worsening steadily. 406 00:22:50,239 --> 00:22:51,699 Speaker 2: So um 407 00:22:52,550 --> 00:22:56,050 Speaker 2: there's also a transition to EVs happening, but it's uh 408 00:22:56,060 --> 00:23:00,280 Speaker 2: going a bit slow, there's a lack of affordable models 409 00:23:00,290 --> 00:23:04,290 Speaker 2: available still on the market. And the Guido administration has 410 00:23:04,300 --> 00:23:06,119 Speaker 2: kept the price of uh 411 00:23:06,849 --> 00:23:10,020 Speaker 2: petrol very cheap. So it's hard for ev to compete. 412 00:23:10,790 --> 00:23:13,760 Speaker 2: Uh And meanwhile, in the power sector, even if there 413 00:23:13,770 --> 00:23:15,750 Speaker 2: is an ev transition, they're all going to be running 414 00:23:15,760 --> 00:23:18,859 Speaker 2: off of uh coal fired power plants that use uh 415 00:23:18,869 --> 00:23:24,300 Speaker 2: very low calorie coal with virtually no uh pollution remediation 416 00:23:24,310 --> 00:23:27,380 Speaker 2: efforts whatsoever. They don't even have a monitoring. Uh That's 417 00:23:27,390 --> 00:23:31,069 Speaker 2: this public in terms of uh smoke stack emissions. And that, 418 00:23:31,079 --> 00:23:33,760 Speaker 2: that really contrasts with China where the the coal fired 419 00:23:33,770 --> 00:23:38,879 Speaker 2: power plants in China um have uh emissions controls that 420 00:23:38,890 --> 00:23:40,050 Speaker 2: are about um 421 00:23:41,170 --> 00:23:43,760 Speaker 2: yeah, they, they allow for about 10% of the pollution 422 00:23:43,770 --> 00:23:45,760 Speaker 2: which is legally permissible here in Indonesia. 423 00:23:46,670 --> 00:23:50,800 Speaker 1: Right? Um So related to that, the expectation for the 424 00:23:50,810 --> 00:23:52,920 Speaker 1: last half a decade or even longer has been that 425 00:23:52,930 --> 00:23:56,920 Speaker 1: Indonesia could ride the whole ev trend around the world 426 00:23:56,930 --> 00:23:59,119 Speaker 1: because it sits on all these minerals and rare earth 427 00:23:59,130 --> 00:24:03,500 Speaker 1: materials that there could be tremendous potential for battery manufacturing 428 00:24:03,510 --> 00:24:08,000 Speaker 1: and EV and it will have the Teslas and the 429 00:24:08,010 --> 00:24:11,479 Speaker 1: B I Ds and maybe the Japanese car manufactures lining 430 00:24:11,489 --> 00:24:13,718 Speaker 1: up to invest here. How's that going? 431 00:24:14,239 --> 00:24:18,780 Speaker 2: Uh It's going um making some progress because um there 432 00:24:18,790 --> 00:24:21,619 Speaker 2: are assemblers for Hyundai and Byd now 433 00:24:23,930 --> 00:24:27,030 Speaker 2: and there are more EV models rolling out gradually this 434 00:24:27,040 --> 00:24:30,650 Speaker 2: year and especially, I think next year probably um the real, 435 00:24:30,660 --> 00:24:34,629 Speaker 2: this is a two wheeler market but that, that's the 436 00:24:34,640 --> 00:24:39,000 Speaker 2: area that there's not been progress uh for most Indonesians 437 00:24:39,010 --> 00:24:42,449 Speaker 2: buying a Motorbike is one of the biggest purchases they'll 438 00:24:42,459 --> 00:24:44,729 Speaker 2: ever make. And so they think about it carefully and 439 00:24:45,050 --> 00:24:47,630 Speaker 2: uh they really don't want to buy something that they, 440 00:24:47,640 --> 00:24:50,089 Speaker 2: they can't hop on and drive clear across Java. And 441 00:24:50,099 --> 00:24:52,449 Speaker 2: so right now that's a petrol bike and, 442 00:24:52,869 --> 00:24:56,020 Speaker 2: and then petrol is so cheap. So the EV bikes 443 00:24:56,030 --> 00:25:00,800 Speaker 2: have not taken off. Uh The, the EV vehicles, four 444 00:25:00,810 --> 00:25:05,219 Speaker 2: wheelers um are just uh you know, CKD is completely 445 00:25:05,229 --> 00:25:06,449 Speaker 2: knocked down and assembled here 446 00:25:07,150 --> 00:25:11,329 Speaker 2: and uh or imported uh completely built up even there's 447 00:25:11,339 --> 00:25:16,670 Speaker 2: very little progress, I think on uh battery manufacturing facilities, 448 00:25:18,400 --> 00:25:21,510 Speaker 2: nickel is the main thing for most types of batteries. 449 00:25:21,520 --> 00:25:26,109 Speaker 2: Uh But there's literally 200 other things also necessary and 450 00:25:26,119 --> 00:25:28,160 Speaker 2: most of those would need to be imported. So uh 451 00:25:28,170 --> 00:25:32,380 Speaker 2: it's actually not really a logical venue to manufacture batteries 452 00:25:32,390 --> 00:25:33,609 Speaker 2: right now, especially because 453 00:25:34,119 --> 00:25:40,089 Speaker 2: uh the administration has been moving away from uh free 454 00:25:40,099 --> 00:25:42,739 Speaker 2: trade and constricting um 455 00:25:43,630 --> 00:25:46,949 Speaker 2: imports and there's massive amounts of non tariff measures. NT 456 00:25:46,959 --> 00:25:49,979 Speaker 2: MS that are equivalent of about 30% import tariffs and 457 00:25:49,989 --> 00:25:51,989 Speaker 2: those are, those have become worse this year. 458 00:25:52,619 --> 00:25:56,020 Speaker 1: So Kevin in the last decade or so, I've seen 459 00:25:56,030 --> 00:26:00,510 Speaker 1: numerous presentation by government bodies about downs streaming of the 460 00:26:00,520 --> 00:26:04,050 Speaker 1: investment strategy of Indonesia. Is this going to continue under 461 00:26:04,060 --> 00:26:06,649 Speaker 1: pro boil? And, and what's your assessment of this effort 462 00:26:06,660 --> 00:26:07,409 Speaker 1: toward downstream? 463 00:26:08,020 --> 00:26:11,520 Speaker 2: Yeah, so we'll continue and in most cases, it's going 464 00:26:11,530 --> 00:26:15,438 Speaker 2: to constitute a big missed opportunity for Indonesia to advance 465 00:26:15,449 --> 00:26:18,439 Speaker 2: and grow because typically 466 00:26:19,670 --> 00:26:23,469 Speaker 2: the government has been attempting to compel investors to 467 00:26:24,359 --> 00:26:24,968 Speaker 2: make 468 00:26:25,750 --> 00:26:28,969 Speaker 2: an investment of one type or another without regard to 469 00:26:28,979 --> 00:26:32,449 Speaker 2: the commercial viability of the investment. And what that does 470 00:26:32,459 --> 00:26:37,089 Speaker 2: basically is just uh thwart investment um for nickel, it 471 00:26:37,099 --> 00:26:40,969 Speaker 2: is possible to capture downstream added value and thereby comply 472 00:26:40,979 --> 00:26:46,228 Speaker 2: with the uh raw nickel or ban that that is 473 00:26:46,239 --> 00:26:47,889 Speaker 2: uh called downstream and 474 00:26:48,630 --> 00:26:52,969 Speaker 2: compels investors to invest in processing such as smelting and 475 00:26:53,020 --> 00:26:54,369 Speaker 2: high pressure acid leaching. 476 00:26:55,219 --> 00:26:57,619 Speaker 2: Uh But that's about the only sector where it really 477 00:26:57,630 --> 00:27:02,079 Speaker 2: works uh in other sectors. Tin bauxite, copper, it's, it's 478 00:27:02,089 --> 00:27:05,369 Speaker 2: a very costly and risky process uh prospect and it's 479 00:27:05,380 --> 00:27:08,540 Speaker 2: just not viable. And even in the nickel sector, the, 480 00:27:08,550 --> 00:27:11,270 Speaker 2: the amount of pollution that's associated with that investment right 481 00:27:11,280 --> 00:27:16,869 Speaker 2: now is uh potentially catastrophic in terms of emissions from 482 00:27:16,880 --> 00:27:20,000 Speaker 2: smokestacks for both uh coal fired power plants, which is 483 00:27:20,010 --> 00:27:23,280 Speaker 2: multiple gigawatts of new capacity coming on stream for that sector. 484 00:27:23,790 --> 00:27:26,709 Speaker 2: Uh And the smelters themselves which pollute even more than 485 00:27:26,719 --> 00:27:30,689 Speaker 2: the coal fired power plants. Uh and especially uh the 486 00:27:30,699 --> 00:27:34,469 Speaker 2: HP processors which produce vast quantities of waste which is 487 00:27:34,479 --> 00:27:39,099 Speaker 2: unstable in a tropical climate. So HPO is uh inappropriate 488 00:27:39,109 --> 00:27:41,810 Speaker 2: technology and there's deforestation too, 489 00:27:42,030 --> 00:27:42,449 Speaker 1: right? 490 00:27:43,030 --> 00:27:45,920 Speaker 1: So Kevin, we've talked about mining a bit about manufacturing. 491 00:27:45,930 --> 00:27:48,910 Speaker 1: Also earlier, you talked about agriculture, let's talk about services. 492 00:27:49,140 --> 00:27:52,150 Speaker 1: It would be nice if Indonesia had a big agriculture 493 00:27:52,160 --> 00:27:55,290 Speaker 1: productivity revolution and a big manufacturing revolution and jobs were 494 00:27:55,300 --> 00:27:59,349 Speaker 1: created there. But it seems like those things are hopefully 495 00:27:59,359 --> 00:28:01,640 Speaker 1: down the road, but not here today. And today the 496 00:28:01,650 --> 00:28:03,959 Speaker 1: jobs are coming at the services sector. So where do 497 00:28:03,969 --> 00:28:07,920 Speaker 1: you see dynamism in the services side and how our 498 00:28:07,930 --> 00:28:11,150 Speaker 1: policies sort of, you know, calibrating toward maximizing the service 499 00:28:11,160 --> 00:28:12,209 Speaker 1: sector potential? 500 00:28:13,319 --> 00:28:17,589 Speaker 2: Uh Well, there's uh been uh very good uh social 501 00:28:17,599 --> 00:28:22,579 Speaker 2: welfare support programs from the Widodo administration. Uh But ultimately, 502 00:28:23,040 --> 00:28:28,900 Speaker 2: you know, it's uh advancing human resource development, especially through education. 503 00:28:28,910 --> 00:28:34,199 Speaker 2: And there have been efforts especially by the Minister Nadi Makarim. 504 00:28:34,209 --> 00:28:34,219 Speaker 2: Uh 505 00:28:35,400 --> 00:28:37,930 Speaker 2: but the Pisa scores that came out late last year, 506 00:28:37,939 --> 00:28:41,709 Speaker 2: so that Indonesia stagnated actually lost ground um as did 507 00:28:41,719 --> 00:28:45,069 Speaker 2: a lot of other countries during the pandemic. But basically 508 00:28:45,079 --> 00:28:50,060 Speaker 2: the the workforce in Indonesia really lacks the skills that 509 00:28:50,069 --> 00:28:53,290 Speaker 2: a modern economy needs. Uh So that's a, that's a 510 00:28:53,300 --> 00:28:57,510 Speaker 2: real constraint. Um English language abilities are improving but uh 511 00:28:57,520 --> 00:28:58,550 Speaker 2: are still lacking. 512 00:28:59,319 --> 00:29:02,050 Speaker 2: Uh I think a real ray of hope or the 513 00:29:02,060 --> 00:29:06,660 Speaker 2: potential area that's really beneficial for Indonesia could be the 514 00:29:06,670 --> 00:29:08,319 Speaker 2: application of A I 515 00:29:09,189 --> 00:29:11,180 Speaker 2: studies are showing that uh 516 00:29:12,380 --> 00:29:16,380 Speaker 2: A I does not actually uh take away jobs um 517 00:29:16,390 --> 00:29:21,410 Speaker 2: uh for lower value positions, but rather it affects uh 518 00:29:21,979 --> 00:29:25,040 Speaker 2: you know, professions like lawyers and doctors uh more so 519 00:29:25,050 --> 00:29:25,849 Speaker 2: and consultants. 520 00:29:26,540 --> 00:29:29,089 Speaker 2: And uh it's basically a leveler in terms of uh 521 00:29:29,099 --> 00:29:31,810 Speaker 2: bridging skills gaps. So, in that sense, it could be 522 00:29:31,819 --> 00:29:35,939 Speaker 2: really ideal for Indonesia because uh to get a perfectly 523 00:29:35,949 --> 00:29:39,579 Speaker 2: written English language essay just now requires a push of 524 00:29:39,589 --> 00:29:42,819 Speaker 2: a button. And that's always been the uh the problem 525 00:29:42,829 --> 00:29:46,739 Speaker 2: area in Indonesia. And also it can compensate for deficiencies 526 00:29:46,750 --> 00:29:50,109 Speaker 2: in an education system. Uh So I think uh applying 527 00:29:50,119 --> 00:29:52,579 Speaker 2: A I is something that can really help a lot 528 00:29:52,589 --> 00:29:54,790 Speaker 2: of Indonesian workers become more competitive actually. 529 00:29:55,400 --> 00:29:56,800 Speaker 2: And that may be helpful. 530 00:29:57,530 --> 00:29:59,869 Speaker 1: I want to stay on the issue of services and 531 00:29:59,880 --> 00:30:04,109 Speaker 1: innovation here. Um So I recognize the point about the 532 00:30:04,119 --> 00:30:07,670 Speaker 1: skills or the education level not being as good as 533 00:30:07,680 --> 00:30:09,569 Speaker 1: one would like to see, to embrace some of the 534 00:30:09,579 --> 00:30:12,209 Speaker 1: modern technologies. But to your point that, you know, hopefully, 535 00:30:12,219 --> 00:30:12,589 Speaker 1: you know, something 536 00:30:12,680 --> 00:30:15,060 Speaker 1: like generative A I could bridge some of that gap. 537 00:30:15,069 --> 00:30:17,900 Speaker 1: But as we speak today, when we look at the 538 00:30:17,910 --> 00:30:22,439 Speaker 1: entrepreneurial spectrum of Indonesians, uh whether it is in rag 539 00:30:22,449 --> 00:30:25,750 Speaker 1: hailing or e-commerce. Are you, are you pleased to see 540 00:30:25,760 --> 00:30:27,699 Speaker 1: the brands that are being created by Indonesians? 541 00:30:28,819 --> 00:30:31,160 Speaker 2: Uh Yeah, there's a creativity, I think 542 00:30:32,339 --> 00:30:36,920 Speaker 2: uh there's not a lot of uh genuine innovation, it's 543 00:30:36,930 --> 00:30:40,430 Speaker 2: really more adaptation of ideas that exist elsewhere and conforming 544 00:30:40,439 --> 00:30:44,319 Speaker 2: them to the local market. Uh And unfortunately, a lot 545 00:30:44,329 --> 00:30:46,040 Speaker 2: of that has been slowing down though, just because of 546 00:30:46,050 --> 00:30:48,488 Speaker 2: the higher global interest rates and the drying up of 547 00:30:48,500 --> 00:30:51,680 Speaker 2: funding from Silicon Valley. Ultimately, there was uh you know, 548 00:30:51,689 --> 00:30:55,619 Speaker 2: several billion dollars raining down on, on this particular neighborhood 549 00:30:55,630 --> 00:30:58,839 Speaker 2: here in Jakarta for year after year. And uh that's 550 00:30:58,849 --> 00:31:02,119 Speaker 2: coming sort of uh as tapering. Definitely. Um 551 00:31:03,079 --> 00:31:09,640 Speaker 2: um but uh Indonesian society is one that definitely Indonesian 552 00:31:09,650 --> 00:31:14,160 Speaker 2: society is definitely one that embraces change in technology. And 553 00:31:14,540 --> 00:31:18,900 Speaker 2: uh um anybody who's slow to take up the latest 554 00:31:18,910 --> 00:31:20,780 Speaker 2: device or app or 555 00:31:21,479 --> 00:31:23,880 Speaker 2: uh this is called the Gap Tech, you know, sort 556 00:31:23,890 --> 00:31:29,430 Speaker 2: of failure to adapt as the acronym, right? 557 00:31:29,900 --> 00:31:33,609 Speaker 1: Uh OK, I want to pivot to discussing the macro environment, 558 00:31:33,619 --> 00:31:35,430 Speaker 1: but before that, I want to ask you one last 559 00:31:35,439 --> 00:31:40,229 Speaker 1: question about the probo administration's or proclivity toward policy um 560 00:31:41,109 --> 00:31:46,290 Speaker 1: subsidies for domestic consumption. The, the story on the milk 561 00:31:46,300 --> 00:31:49,770 Speaker 1: or energy subsidies and so on. Where do you see 562 00:31:49,819 --> 00:31:54,290 Speaker 1: policies around subsidy subsidization of certain consumption going? 563 00:31:55,189 --> 00:31:58,609 Speaker 2: Uh Yeah, they're gonna be huge. And that's what uh 564 00:31:58,619 --> 00:32:02,989 Speaker 2: Prabowo emphasized throughout the campaign. And uh there's active work 565 00:32:03,000 --> 00:32:05,290 Speaker 2: underway to prepare for a free lunch program. 566 00:32:05,979 --> 00:32:07,800 Speaker 2: The original idea was that this would be a way 567 00:32:07,810 --> 00:32:10,599 Speaker 2: to address stunting, which is a huge problem in Indonesia 568 00:32:12,020 --> 00:32:16,250 Speaker 2: and uh Prabowo's uh rival in the presidential campaign. Gano 569 00:32:16,800 --> 00:32:19,060 Speaker 2: pointed out in one of the presidential debates that uh 570 00:32:19,069 --> 00:32:22,099 Speaker 2: by the time that a child is in school and 571 00:32:22,109 --> 00:32:25,239 Speaker 2: able to receive a free lunch, they're well beyond their 572 00:32:25,250 --> 00:32:28,410 Speaker 2: 1st 1000 days of life, which is when stunting occurs. 573 00:32:28,420 --> 00:32:31,489 Speaker 2: So it's a program that will completely miss the mark 574 00:32:31,500 --> 00:32:34,849 Speaker 2: with regard to stunting. Uh It has other advantages, of course, 575 00:32:34,859 --> 00:32:38,170 Speaker 2: uh school lunches are a good thing, but it's gonna 576 00:32:38,180 --> 00:32:41,770 Speaker 2: cost 450 trillion or p almost $30 billion. And 577 00:32:42,050 --> 00:32:44,790 Speaker 2: there's a lot of other priorities that Indonesia needs. So 578 00:32:45,040 --> 00:32:47,310 Speaker 2: uh how that's going to affect the fiscal accounts is 579 00:32:47,319 --> 00:32:49,900 Speaker 2: a major question right now because Prabowo has also been 580 00:32:50,109 --> 00:32:55,930 Speaker 2: uh talking earnestly about expanding military spending dramatically. That's clearly 581 00:32:55,939 --> 00:32:59,109 Speaker 2: uh probably his foremost interest, also the construction of food 582 00:32:59,119 --> 00:33:02,719 Speaker 2: estates for this food autarchy program and also the construction 583 00:33:02,729 --> 00:33:05,670 Speaker 2: of sugar cane estates for the ethanol program. 584 00:33:06,089 --> 00:33:10,810 Speaker 2: Uh And he had proposed pledged to spend on scholarships 585 00:33:10,819 --> 00:33:12,300 Speaker 2: for um 586 00:33:13,250 --> 00:33:17,520 Speaker 2: overseas university studies and science and math and engineering. So 587 00:33:17,530 --> 00:33:20,260 Speaker 2: those are all expensive uh budget items. And meanwhile, there's 588 00:33:20,270 --> 00:33:24,719 Speaker 2: resistance uh among advisor to pr about raising taxes, there's 589 00:33:24,729 --> 00:33:26,589 Speaker 2: supposed to be a, a 1% 590 00:33:27,729 --> 00:33:30,829 Speaker 2: increase in the value added tax happening in January. But 591 00:33:30,839 --> 00:33:33,729 Speaker 2: uh that's uh a little bit unclear right now. So 592 00:33:33,739 --> 00:33:38,540 Speaker 2: if there's hesitant hesitancy about uh increasing tax collection, on 593 00:33:38,550 --> 00:33:42,510 Speaker 2: one hand, with an increase in spending, on the other hand, 594 00:33:42,839 --> 00:33:46,189 Speaker 2: Indonesia does have the capacity to borrow more. Uh But 595 00:33:46,410 --> 00:33:49,020 Speaker 2: it's going to be a high wire act seemingly at 596 00:33:49,030 --> 00:33:49,750 Speaker 2: this stage. 597 00:33:50,160 --> 00:33:52,550 Speaker 1: Perfect segue. In fact, you have made the segway happen. 598 00:33:52,560 --> 00:33:53,859 Speaker 1: So let's talk about Macro. 599 00:33:54,199 --> 00:33:56,869 Speaker 1: Uh So yes, I think I, I share some of 600 00:33:56,880 --> 00:33:59,739 Speaker 1: the concerns you talk about the fiscal outlook, but I'm 601 00:33:59,750 --> 00:34:01,770 Speaker 1: glad that at the very end of your answer, you 602 00:34:01,780 --> 00:34:04,729 Speaker 1: added to the point that there is space, fiscal space 603 00:34:04,739 --> 00:34:08,020 Speaker 1: for Indonesia compared to many other emerging market and developed 604 00:34:08,030 --> 00:34:11,989 Speaker 1: market economies out there. Singapore's debt, Indonesia's debt GDP ratio 605 00:34:12,000 --> 00:34:13,919 Speaker 1: or even fiscal deficit is not particularly 606 00:34:14,310 --> 00:34:16,570 Speaker 1: something that one should be very concerned about. It's a 607 00:34:16,580 --> 00:34:18,889 Speaker 1: quality of spending that matters. And I think you and 608 00:34:18,899 --> 00:34:21,770 Speaker 1: I share the concern that deficit is one thing. But 609 00:34:21,780 --> 00:34:25,250 Speaker 1: if it's being wasteful, then, you know, it's, it's not good. 610 00:34:25,590 --> 00:34:29,629 Speaker 1: Uh So from fixed income markets perspective, interest rates in 611 00:34:29,639 --> 00:34:33,360 Speaker 1: Indonesia don't look prohibitive maybe higher than it was the 612 00:34:33,370 --> 00:34:36,370 Speaker 1: last 10 years. But we know how high interest rates 613 00:34:36,379 --> 00:34:39,139 Speaker 1: have been in Indonesia in the past. So general view 614 00:34:39,149 --> 00:34:41,449 Speaker 1: on the macro environment from inflation to interest rates. What's 615 00:34:41,459 --> 00:34:42,169 Speaker 1: your sense? 616 00:34:42,590 --> 00:34:44,679 Speaker 2: Uh Well, there's a fair amount of momentum and the 617 00:34:44,689 --> 00:34:48,139 Speaker 2: news has been able to record pretty steady 5% GDP growth. 618 00:34:48,149 --> 00:34:51,449 Speaker 2: Uh The bulk of the economy is household consumption and 619 00:34:51,459 --> 00:34:53,370 Speaker 2: uh in the latest quarter for the first quarter, it 620 00:34:53,379 --> 00:34:57,679 Speaker 2: was 4.9% which was slightly soft but still pretty good. 621 00:34:58,100 --> 00:35:01,750 Speaker 2: Uh There are some anecdotal signs that uh that's softening 622 00:35:01,760 --> 00:35:04,290 Speaker 2: a lot now in the second quarter. And that would 623 00:35:04,300 --> 00:35:07,449 Speaker 2: not be surprising uh because commodity prices are down and 624 00:35:07,459 --> 00:35:10,989 Speaker 2: that's a big driver and manufactured exports had been really 625 00:35:11,000 --> 00:35:14,879 Speaker 2: strong two years ago. And uh now with the uh 626 00:35:14,889 --> 00:35:19,929 Speaker 2: trade restrictions, the manufacturers seem to be having difficulty uh 627 00:35:19,939 --> 00:35:22,060 Speaker 2: producing and uh 628 00:35:22,850 --> 00:35:24,589 Speaker 2: interest rates are a little bit higher but interest rates 629 00:35:24,600 --> 00:35:26,790 Speaker 2: don't really affect consumers here that much. There's not that 630 00:35:26,800 --> 00:35:28,510 Speaker 2: many people who are sensitive to interest rates. 631 00:35:29,139 --> 00:35:29,760 Speaker 2: Um 632 00:35:30,429 --> 00:35:33,089 Speaker 2: But in any event, maybe just the global slowdown, there 633 00:35:33,100 --> 00:35:34,929 Speaker 2: seems to be a little bit of a softness on 634 00:35:34,939 --> 00:35:37,010 Speaker 2: the consumer side and that's going to translate through to 635 00:35:37,020 --> 00:35:38,570 Speaker 2: GDP I think this year. 636 00:35:39,360 --> 00:35:40,899 Speaker 2: Uh And um 637 00:35:41,580 --> 00:35:46,669 Speaker 2: then the commodity prices also affect the fiscal account. Coal 638 00:35:46,679 --> 00:35:48,360 Speaker 2: is the big one and the price of coal is 639 00:35:48,370 --> 00:35:50,199 Speaker 2: way down. Um 640 00:35:50,979 --> 00:35:54,459 Speaker 2: uh But the price of oil has been stubbornly high. 641 00:35:54,469 --> 00:35:57,110 Speaker 2: So typically they, they go in conjunction, but they're moving 642 00:35:57,120 --> 00:36:00,989 Speaker 2: in different directions and uh high oil price means continued 643 00:36:01,000 --> 00:36:03,530 Speaker 2: high subsidies for the fossil fuel subsidies. 644 00:36:04,449 --> 00:36:07,830 Speaker 2: So I think there's headwinds and uh for ball is 645 00:36:07,840 --> 00:36:10,600 Speaker 2: going to have a tricky time. I think, uh you know, 646 00:36:10,610 --> 00:36:14,050 Speaker 2: juggling the uh the different trends that are underway right 647 00:36:14,060 --> 00:36:14,989 Speaker 2: now economically. 648 00:36:15,969 --> 00:36:19,659 Speaker 1: What about the fact that Bank Indonesia decided to surprise 649 00:36:19,669 --> 00:36:22,489 Speaker 1: the market with a rate hike earlier this year? Is 650 00:36:22,500 --> 00:36:24,310 Speaker 1: that a function of looking at inflation or is it 651 00:36:24,320 --> 00:36:26,888 Speaker 1: the currency market volatility that's worrying them? Yeah, that 652 00:36:26,899 --> 00:36:30,629 Speaker 2: was to defend the rep because uh group had been 653 00:36:30,639 --> 00:36:34,959 Speaker 2: suddenly weak there for a couple of weeks. Um And 654 00:36:34,969 --> 00:36:40,389 Speaker 2: foreign reserves have not been gaining. They've been um volatile 655 00:36:40,399 --> 00:36:40,638 Speaker 2: uh 656 00:36:41,449 --> 00:36:45,709 Speaker 2: uh even throughout the period when Indonesia was recording massive 657 00:36:45,719 --> 00:36:49,350 Speaker 2: trade surpluses amid high commodity prices and a boom in 658 00:36:49,360 --> 00:36:52,429 Speaker 2: manufactured exports. In 2022 the foreign reserves really did not 659 00:36:52,439 --> 00:36:53,340 Speaker 2: gain much at all. 660 00:36:54,129 --> 00:36:57,239 Speaker 2: Uh So the there was a 25 basis point hike 661 00:36:57,250 --> 00:37:00,919 Speaker 2: uh to 6.25% by Perry Orio, the governor of B I. 662 00:37:00,929 --> 00:37:03,399 Speaker 2: And that was a gesture to show that the bank 663 00:37:03,409 --> 00:37:06,429 Speaker 2: was vigilant about the currency and it was good. It 664 00:37:06,439 --> 00:37:08,500 Speaker 2: was the right move and it helped and the currency 665 00:37:08,510 --> 00:37:10,909 Speaker 2: has been stable since then. So one of the big 666 00:37:10,919 --> 00:37:15,449 Speaker 2: benefits that Prabowo has is uh uh war uh and 667 00:37:15,459 --> 00:37:18,750 Speaker 2: his term still uh will continue for another four years. 668 00:37:18,760 --> 00:37:19,229 Speaker 2: So 669 00:37:19,629 --> 00:37:24,879 Speaker 2: uh that's a, that's a positive. However, Prabowo's main economics advisor, 670 00:37:24,889 --> 00:37:27,800 Speaker 2: Dr Ed, we bowel uh complained about the interest rate 671 00:37:27,810 --> 00:37:29,839 Speaker 2: hike that uh or go made. 672 00:37:31,310 --> 00:37:32,169 Speaker 1: So we know 673 00:37:33,110 --> 00:37:36,340 Speaker 1: just drawing a parallel between the US and Indonesia that 674 00:37:36,610 --> 00:37:38,729 Speaker 1: people like Trump like to think that they should be 675 00:37:38,739 --> 00:37:41,449 Speaker 1: able to control the interest rate and brow beat the 676 00:37:41,459 --> 00:37:45,750 Speaker 1: Federal Reserve down. Do you worry about Bi's independence under 677 00:37:45,760 --> 00:37:46,649 Speaker 1: the new administration? 678 00:37:46,979 --> 00:37:48,389 Speaker 2: Yes, definitely. Yes. 679 00:37:49,729 --> 00:37:54,510 Speaker 2: You know, Prabowo throughout the campaign would uh almost every 680 00:37:54,520 --> 00:37:57,929 Speaker 2: day say that uh uh I am not an economist 681 00:37:57,939 --> 00:38:00,750 Speaker 2: and then proceed for 20 minutes to talk about economics 682 00:38:00,760 --> 00:38:03,909 Speaker 2: in a way that proved his point, you know, and 683 00:38:03,919 --> 00:38:08,689 Speaker 2: um meanwhile, uh uh we Bobo, his advisor is already 684 00:38:08,699 --> 00:38:11,779 Speaker 2: sparring with uh the central bank about their decision making 685 00:38:11,790 --> 00:38:15,659 Speaker 2: and that's an ominous sign. Uh Prabowo also gets uh 686 00:38:15,669 --> 00:38:18,030 Speaker 2: a little bit of advice from 687 00:38:18,479 --> 00:38:21,689 Speaker 2: his brother in law Sudra Janno, who had been the 688 00:38:21,699 --> 00:38:26,580 Speaker 2: governor of B I in 1998 when uh the currency 689 00:38:26,590 --> 00:38:30,149 Speaker 2: lost so much ground against thee in the Asian financial crisis. 690 00:38:30,159 --> 00:38:33,419 Speaker 2: And um it's unclear what kind of uh input he 691 00:38:33,429 --> 00:38:34,649 Speaker 2: will provide for Prabowo. 692 00:38:35,520 --> 00:38:40,399 Speaker 1: I've been seeing government presentations of a 8% medium term 693 00:38:40,409 --> 00:38:44,800 Speaker 1: growth target and the year 2045 being, you know, sort 694 00:38:44,810 --> 00:38:49,020 Speaker 1: of a landmark year when Indonesia becomes permanently in the 695 00:38:49,070 --> 00:38:53,138 Speaker 1: mid high income category. Uh what would it take 696 00:38:53,659 --> 00:38:57,959 Speaker 1: to achieve anything above the trend growth rate which is 5% 697 00:38:58,530 --> 00:39:01,120 Speaker 1: 8 like even say six or seven, what would it take? 698 00:39:01,409 --> 00:39:05,040 Speaker 2: 8% is achievable but over the course of two years, 699 00:39:05,050 --> 00:39:07,719 Speaker 2: so 4% 1 year and 4% the next year you 700 00:39:07,729 --> 00:39:08,678 Speaker 2: have 8% now. 701 00:39:09,840 --> 00:39:11,739 Speaker 2: Um No, it's um 702 00:39:12,389 --> 00:39:16,580 Speaker 2: 8% is a really far fetched prospect given the uh 703 00:39:16,739 --> 00:39:21,449 Speaker 2: constriction of trade rules this year. And um 704 00:39:22,290 --> 00:39:26,310 Speaker 2: uh the slowdown in foreign investment that grew just by 11% 705 00:39:26,320 --> 00:39:28,870 Speaker 2: year on year in the first quarter, domestic investment was strong, 706 00:39:28,879 --> 00:39:32,120 Speaker 2: but Indonesia is not getting the the high quality long 707 00:39:32,129 --> 00:39:37,029 Speaker 2: term investment necessary to support uh um 708 00:39:38,050 --> 00:39:43,419 Speaker 2: um 7% or possibly even 6%. So uh the global 709 00:39:43,429 --> 00:39:47,669 Speaker 2: headwinds and so on. Um Yeah, there's, I think a 710 00:39:47,679 --> 00:39:50,750 Speaker 2: greater chance for a slowdown in growth. Um 711 00:39:52,100 --> 00:39:55,149 Speaker 2: certainly by 2026 anyway, uh you know, there is momentum 712 00:39:55,159 --> 00:39:57,639 Speaker 2: that Indonesia can benefit from for this year and possibly 713 00:39:57,649 --> 00:40:01,279 Speaker 2: in the next year. But um this 714 00:40:02,459 --> 00:40:06,399 Speaker 2: the policy framework and um the, the surrounding conditions uh 715 00:40:06,409 --> 00:40:09,689 Speaker 2: internationally just I don't think support a significant acceleration of 716 00:40:09,699 --> 00:40:11,359 Speaker 2: growth and uh the 717 00:40:12,399 --> 00:40:15,860 Speaker 2: demographic bonus is uh diminishing gradually. So 718 00:40:16,510 --> 00:40:17,209 Speaker 2: um 719 00:40:18,030 --> 00:40:22,040 Speaker 2: uh Indonesia's prospects for escaping a middle income trap uh 720 00:40:22,050 --> 00:40:25,448 Speaker 2: are are looking uh dim, 721 00:40:26,659 --> 00:40:27,129 Speaker 1: right? 722 00:40:28,030 --> 00:40:31,169 Speaker 1: Um Final question, Kevin. Uh so we've sort of done 723 00:40:31,179 --> 00:40:34,629 Speaker 1: a sweep of what can be expected on the policy front, 724 00:40:34,639 --> 00:40:36,790 Speaker 1: on the economic side as well as on the foreign 725 00:40:36,800 --> 00:40:41,739 Speaker 1: policy side for the uh pro administration. Um what would 726 00:40:41,750 --> 00:40:44,729 Speaker 1: be the legacy of the Djoko administration's, you know, 10 727 00:40:44,739 --> 00:40:45,899 Speaker 1: years running Indonesia. 728 00:40:46,840 --> 00:40:49,879 Speaker 2: Yeah. Uh it's been complex. Um 729 00:40:50,739 --> 00:40:54,040 Speaker 2: Widodo has been able to outperform his predecessors, uh which 730 00:40:54,050 --> 00:40:57,600 Speaker 2: is not saying much really, uh uh especially with regard 731 00:40:57,610 --> 00:41:00,800 Speaker 2: to maintaining price stability. So, inflation is the major thing 732 00:41:00,810 --> 00:41:04,439 Speaker 2: that Indonesians care about, understandably. And that's been remarkably low 733 00:41:04,449 --> 00:41:09,330 Speaker 2: throughout the entire Widodo era. And that's probably the main 734 00:41:09,340 --> 00:41:13,529 Speaker 2: reason for his immense popularity, delivery of social services and 735 00:41:13,540 --> 00:41:16,409 Speaker 2: social welfare spending has been quite effective. 736 00:41:17,370 --> 00:41:20,159 Speaker 2: Um Widodo has benefited from high commodity prices that have 737 00:41:20,169 --> 00:41:22,839 Speaker 2: helped support that, but it's something that he's cared very 738 00:41:22,850 --> 00:41:27,270 Speaker 2: much about. And uh that's uh really resonated with voters 739 00:41:27,520 --> 00:41:32,030 Speaker 2: um along with uh infrastructure development, which was a real 740 00:41:32,040 --> 00:41:35,060 Speaker 2: breakthrough because uh the previous administration of Yudhoyono had been 741 00:41:35,070 --> 00:41:39,310 Speaker 2: chronically unable to acquire land for infrastructure. So the combination 742 00:41:39,320 --> 00:41:42,359 Speaker 2: of those things, plus we built his own demeanor whereby 743 00:41:42,370 --> 00:41:46,639 Speaker 2: he projects a humble common image and 744 00:41:47,229 --> 00:41:52,500 Speaker 2: um yeah, connects and shows empathy with the public. Uh 745 00:41:52,510 --> 00:41:57,760 Speaker 2: That's uh very much his legacy. Um that's positive. Um On, 746 00:41:57,770 --> 00:42:01,070 Speaker 2: on the other side of the ledger, uh democratization has 747 00:42:01,080 --> 00:42:04,919 Speaker 2: really suffered. There's been manipulation of legal system, institutions. Uh 748 00:42:04,939 --> 00:42:10,250 Speaker 2: There's been a lack of respect for democratic norms and 749 00:42:10,260 --> 00:42:12,520 Speaker 2: public discourse and debate. It's been 750 00:42:13,040 --> 00:42:17,888 Speaker 2: um the intimidation of political parties and civil society figures. 751 00:42:18,689 --> 00:42:19,629 Speaker 2: Uh So, 752 00:42:20,479 --> 00:42:24,229 Speaker 2: uh and then finally, the, the endorsement of uh Prabowo 753 00:42:24,239 --> 00:42:28,179 Speaker 2: quixotically uh uh in the, in the election is all 754 00:42:28,189 --> 00:42:33,500 Speaker 2: combined to provide for a uh adverse legacy associated with Widodo, 755 00:42:33,510 --> 00:42:36,739 Speaker 2: which I think is explained by the, the conflicts of 756 00:42:36,750 --> 00:42:40,540 Speaker 2: interest and, and the covenant standards in the administration and 757 00:42:40,550 --> 00:42:46,439 Speaker 2: um a desire by Widodo to find a safe uh reliable, 758 00:42:46,449 --> 00:42:48,370 Speaker 2: loyal uh successor 759 00:42:49,469 --> 00:42:51,399 Speaker 2: um to um 760 00:42:52,149 --> 00:42:52,479 Speaker 2: you know, 761 00:42:53,209 --> 00:42:56,428 Speaker 2: safeguard the interest of the Widodo era in the future. 762 00:42:57,159 --> 00:43:00,790 Speaker 1: That's absolutely critical. The final thing that you said to me, 763 00:43:00,800 --> 00:43:03,699 Speaker 1: whether it's a CEO or a president, their legacy should 764 00:43:03,709 --> 00:43:05,340 Speaker 1: not be judged the day they leave, but a couple 765 00:43:05,350 --> 00:43:08,739 Speaker 1: of years after they leave because the transition is also 766 00:43:08,750 --> 00:43:10,979 Speaker 1: a function of the way they think left things behind. 767 00:43:11,909 --> 00:43:14,379 Speaker 1: Um Kevin o'rourke, this has been terrific. Thank you so 768 00:43:14,389 --> 00:43:15,679 Speaker 1: much for your time and insights. 769 00:43:15,909 --> 00:43:17,770 Speaker 2: Yeah. Thank you. Glad to be here. Appreciate 770 00:43:17,780 --> 00:43:17,879 Speaker 2: it. 771 00:43:17,889 --> 00:43:20,370 Speaker 1: Great to have you and thanks to our listeners and 772 00:43:20,379 --> 00:43:23,889 Speaker 1: viewers as well. Copy Time was produced by Ken Delbridge Violet, 773 00:43:23,899 --> 00:43:27,719 Speaker 1: Lee and Daisy Sherman provided additional assistance. All 124 episodes 774 00:43:27,729 --> 00:43:31,299 Speaker 1: of the podcast are available on youtube, Apple Google and Spotify. 775 00:43:31,449 --> 00:43:34,020 Speaker 1: As for our research output, you can find them all 776 00:43:34,030 --> 00:43:37,219 Speaker 1: by Googling devious research library. Have a great day.