WEBVTT - Kopi Time E154 - Chatib Basri on Indonesia’s Present and Future 0:00:05.960 --> 0:00:08.779 Welcome to COI Time, a podcast series on markets and 0:00:08.779 --> 0:00:12.670 economies from DBS Group Research. I'm Tabei, chief economist. Welcome 0:00:12.670 --> 0:00:17.430 you to our 154th episode. This episode was recorded in 0:00:17.430 --> 0:00:22.790 Jakarta at the DBS Asia Insights Conference 2025 on the 0:00:22.790 --> 0:00:26.229 21st of May. I had the privilege of discussing Indonesia's 0:00:26.229 --> 0:00:28.389 near and medium term outlook with Kati Basri. 0:00:28.780 --> 0:00:33.540 Indonesia's former finance minister. In this conversation, Mr. Basri talks 0:00:33.540 --> 0:00:37.619 about Indonesia's strategy during a time of geoeconomic fragmentation, the 0:00:37.619 --> 0:00:40.700 ability of the economy to absorb shocks, what it would 0:00:40.700 --> 0:00:44.580 take to reach 8% growth, the challenges to education, health, 0:00:44.590 --> 0:00:48.880 and infrastructure, sectoral development strategies in place, and the future 0:00:48.880 --> 0:00:51.020 of jobs amid tech disruption. 0:00:51.490 --> 0:00:55.750 And erudite speaker, Mr. Bastri's insights are invaluable to those 0:00:55.750 --> 0:01:01.950 following Southeast Asia's most populous economy. Let's now hear from Mr. Bastri. Basri, 0:01:02.310 --> 0:01:04.029 welcome to our program. 0:01:04.709 --> 0:01:06.470 Hi, Dayer, thanks for having me. 0:01:06.669 --> 0:01:09.110 I remember 2 years ago, we did something like this, 0:01:09.230 --> 0:01:10.260 so this is round 2 0:01:11.709 --> 0:01:12.750 in a different situation, 0:01:13.059 --> 0:01:13.470 slightly 0:01:13.470 --> 0:01:16.989 different situation. I went back to our conversation from 2 0:01:16.989 --> 0:01:17.550 years ago. 0:01:18.080 --> 0:01:23.540 And I remember you began that conversation by describing Indonesia 0:01:23.540 --> 0:01:29.080 as a disappointing country. It disappoints the ones who think 0:01:29.300 --> 0:01:32.300 growth is about to collapse. It disappoints the one who 0:01:32.300 --> 0:01:35.059 think that it is just about to take off. Very 0:01:35.059 --> 0:01:39.179 different circumstances now. We just heard from Park Haim. We 0:01:39.180 --> 0:01:41.730 have been hearing from the government about a very ambitious 0:01:41.730 --> 0:01:42.459 growth agenda. 0:01:43.139 --> 0:01:45.500 I want to talk about that later. I want to 0:01:45.500 --> 0:01:48.300 first talk about the global environment. 0:01:49.129 --> 0:01:54.160 Reciprocal tariff, country by country bilateral discussions with Donald Trump 0:01:54.160 --> 0:01:57.089 and his team about how to get some relief. We're 0:01:57.089 --> 0:01:59.559 in a bit of a pause, but I'm not too 0:01:59.559 --> 0:02:02.629 sure how long the pause will last. What's your assessment 0:02:02.629 --> 0:02:04.569 of this whole trade war situation? 0:02:05.489 --> 0:02:11.130 Well, let me, perhaps let me start by putting the layout, 0:02:11.210 --> 0:02:14.610 the global context first. I think if you look at 0:02:14.610 --> 0:02:17.929 about the issue of the trade balance, you are an economist, timer. 0:02:18.788 --> 0:02:23.119 The trade balance is a reflection of the saving investment gap. Yeah, 0:02:23.279 --> 0:02:24.899 so the way I look at it. 0:02:25.809 --> 0:02:29.589 If this Trump administration would like to introduce the so-called 0:02:29.589 --> 0:02:33.910 uh the tax cut, this will widen the, the trade deficit. 0:02:34.500 --> 0:02:38.410 And if the way they address the trade deficit by 0:02:38.699 --> 0:02:42.100 increasing tariff, I don't think that this 0:02:42.850 --> 0:02:46.788 This, this policy will entirely address this issue of district balance. 0:02:47.130 --> 0:02:50.490 What is happening in the US that you would expect 0:02:50.490 --> 0:02:52.649 that's probably there is a risk of the inflationary. 0:02:53.559 --> 0:02:57.508 Um, the slowdown of the economic growth. So under this 0:02:57.508 --> 0:02:59.710 kind of situation, it's not easy for the Fed to 0:02:59.710 --> 0:03:03.299 make a decision because the probability of recession will probably 0:03:03.300 --> 0:03:05.589 will increase. At the same time there is a risk 0:03:05.589 --> 0:03:08.490 of the inflationary whether they have to cut the rate 0:03:08.750 --> 0:03:10.770 or they have to increase the rate, they are really 0:03:10.770 --> 0:03:11.978 at a crossroads now. 0:03:13.050 --> 0:03:16.580 Of course, this will have an implication to the global trade. Yeah, 0:03:16.649 --> 0:03:19.929 I can imagine that export in many. 0:03:20.839 --> 0:03:24.440 You know, emerging developing economies will be affected. But now 0:03:24.440 --> 0:03:27.198 let me talk about what will be the implication for Indonesia. 0:03:28.050 --> 0:03:29.899 Um, the way I look at it. 0:03:32.240 --> 0:03:37.259 The share of export Indonesia to GDP is only 25%, right? 0:03:37.570 --> 0:03:41.080 And if you look at the share of export, Indonesia 0:03:41.080 --> 0:03:44.320 export to US is only 10%. So if you look 0:03:44.320 --> 0:03:49.339 at the direct impact, perhaps the direct impact to Indonesian GDP, 0:03:49.869 --> 0:03:54.080 it's probably about 2.5%. So the impact will be relatively limited. 0:03:54.669 --> 0:03:59.789 So I'm, I'm quite confident that this year, the economic 0:03:59.789 --> 0:04:03.139 growth in Isia will be faster than Singapore. Why is that? 0:04:03.789 --> 0:04:06.789 Because in the case of Singapore, your export to GDP 0:04:06.789 --> 0:04:08.190 is about 120%. 0:04:09.169 --> 0:04:12.110 180 actually, and if you look at even Vietnam is 0:04:12.110 --> 0:04:17.250 about almost 90%. So under this kind of situation, Indonesia 0:04:17.619 --> 0:04:21.820 will still maintain the relatively high growth in Southeast Asia. 0:04:22.260 --> 0:04:24.579 Of course, the Indonesian economy will be affected by. 0:04:25.730 --> 0:04:29.329 My estimate is probably about 0.5%, so if the baseline 0:04:29.329 --> 0:04:32.890 is about 5%, so probably we are, you know, we 0:04:32.890 --> 0:04:37.678 are experiencing the situation about 4.5% of the economic growth, uh, 0:04:37.730 --> 0:04:41.488 this year. It's not easy, but the good news is. 0:04:43.290 --> 0:04:46.558 I would call Indonesia is the least, one of the 0:04:46.559 --> 0:04:49.919 least unattractive countries in the world, not because we are 0:04:49.920 --> 0:04:51.969 doing great, but because the other part of the world 0:04:51.970 --> 0:04:54.989 are in trouble. So if you are an investor, you're 0:04:54.988 --> 0:04:58.678 talking about you're not looking for perfection, you are looking 0:04:58.678 --> 0:05:04.238 for a relative return, and Indonesia is still an interesting 0:05:04.238 --> 0:05:08.920 country to invest. Yeah. And then in addition to that, 0:05:09.529 --> 0:05:12.109 With the risk of the trade war between US and China, 0:05:12.410 --> 0:05:14.450 I won't be surprised if there is a sort of 0:05:14.450 --> 0:05:18.390 like relocation of the production base from China to Southeast 0:05:18.390 --> 0:05:19.200 Asian countries. 0:05:20.220 --> 0:05:23.100 Maybe to Vietnam, maybe to Indonesia, but the way I 0:05:23.100 --> 0:05:25.459 look at it, if you look at the trade surplus 0:05:25.459 --> 0:05:29.570 between Vietnam and the US, it's about $120 billion US dollars, 0:05:30.339 --> 0:05:33.660 whereas for Indonesia it's about $19 billion US dollars. So 0:05:33.660 --> 0:05:36.220 for us it's relatively easy to settle this issue with 0:05:36.220 --> 0:05:39.459 the US, whereas in the case of Vietnam, if they 0:05:39.459 --> 0:05:41.940 want to settle this issue of the trade surplus, they 0:05:41.940 --> 0:05:46.130 probably have to increase their import about 11 to 12 times. 0:05:46.339 --> 0:05:49.700 It's not easy. Yeah, so that is why I can see. 0:05:50.660 --> 0:05:55.488 The possibilities of relocation from China into Indonesia provided the 0:05:55.488 --> 0:06:00.010 government would implement the economic deregulation. The good news is 0:06:00.010 --> 0:06:05.559 President Prabowo already announced last April that government is committed 0:06:05.839 --> 0:06:08.890 to economic deregulation. I hope I respond to your question. 0:06:10.309 --> 0:06:15.190 I stay with the global agenda a little longer, um. 0:06:16.059 --> 0:06:19.750 To your point that if the US has an inflation problem, 0:06:20.178 --> 0:06:22.500 while the rest of the world does not, if the 0:06:22.500 --> 0:06:26.130 US has a savings investment gap problem which might be 0:06:26.130 --> 0:06:29.049 exacerbated if there is a tax cut, which looks likely, 0:06:29.299 --> 0:06:31.739 while the rest of the world really does not in 0:06:31.738 --> 0:06:34.980 a situation like that, where do you see the dollar 0:06:34.980 --> 0:06:37.619 go and then therefore what does it mean for RIA? 0:06:37.940 --> 0:06:40.299 Where do you see US interest go and what does 0:06:40.299 --> 0:06:42.529 it mean for Indonesia's interest rates? 0:06:42.700 --> 0:06:43.089 Very good 0:06:43.089 --> 0:06:44.019 question because. 0:06:45.100 --> 0:06:48.670 When you know before the reciprocal tariff. 0:06:49.709 --> 0:06:54.039 I was expecting with the universal tariffs about 10% when 0:06:54.170 --> 0:06:59.920 President Trump came to power. I was expecting that dollar 0:06:59.920 --> 0:07:01.940 will continue to be the safe haven asset. 0:07:02.829 --> 0:07:06.700 Yeah, but it seems to me that after the reciprocal tariff, 0:07:07.350 --> 0:07:10.670 there are some concerns from the financial market about the 0:07:10.670 --> 0:07:13.100 role of dollar to be the. 0:07:14.220 --> 0:07:18.670 The only one safe haven asset. So if you look at, I'm, 0:07:18.750 --> 0:07:21.910 I'm not saying that this, you know, will happen in 0:07:21.910 --> 0:07:25.290 the extreme case radically, but there is a tendency of 0:07:25.290 --> 0:07:29.940 the so-called the de-dollarization at this moment. And for that reason, 0:07:30.190 --> 0:07:33.149 we can see the depreciation of the US dollar against 0:07:33.149 --> 0:07:37.429 major currency, including the rupiah. Yeah, even though nowadays that 0:07:37.429 --> 0:07:41.709 the rupiah is still about $16,400. So the way I 0:07:41.709 --> 0:07:42.260 look at it. 0:07:43.170 --> 0:07:45.000 Timer under this kind of situation. 0:07:45.690 --> 0:07:49.160 I wouldn't be surprised if in the medium term we 0:07:49.160 --> 0:07:52.470 will see the depreciation of the US dollar against major currency, 0:07:52.799 --> 0:07:54.720 so there is room for a bank in Indonesia to 0:07:54.720 --> 0:07:55.160 cut the rate. 0:07:56.130 --> 0:07:58.269 Yeah, and then I think this. 0:07:59.320 --> 0:08:03.040 Just right now today, right, the, the Bank in Indonesia 0:08:03.040 --> 0:08:05.600 cut the 25 basis points. I can see more room 0:08:05.600 --> 0:08:08.600 because if you look at our inflation, it's about less 0:08:08.600 --> 0:08:12.119 than 3% now, 2.5%. If the tendency of the US 0:08:12.119 --> 0:08:16.549 dollar is depreciate against major currency, so I don't think, I, 0:08:16.640 --> 0:08:19.160 I think there is room for bank Indonesia to cut 0:08:19.160 --> 0:08:23.480 the rate and if you look at the real uh return, yeah, 0:08:23.799 --> 0:08:27.839 the spread between, let's say the Indonesian government bond. 0:08:28.239 --> 0:08:32.598 And the inflation and also the, the, the, the, um, 0:08:32.690 --> 0:08:37.250 you know, the, the SRBI for example, I think for, 0:08:37.489 --> 0:08:41.409 for many investors, you know, investing in the rupia is 0:08:41.409 --> 0:08:43.450 quite attractive. So I think there is a room for 0:08:43.450 --> 0:08:46.729 a bank in Indonesia to get the rate unless the 0:08:46.729 --> 0:08:50.280 Fed with this is not an easy situation at this moment, 0:08:50.570 --> 0:08:54.049 raise the interest rate. Yeah, but with the probability of recession. 0:08:54.539 --> 0:08:58.299 Probably around 40% for the US It is not easy 0:08:58.299 --> 0:09:01.460 for the Fed to raise the rate at least probably 0:09:01.460 --> 0:09:03.380 they what what they will do if they don't want 0:09:03.380 --> 0:09:06.739 to cut the rate, probably they will maintain the, the, the, 0:09:06.780 --> 0:09:08.530 the Fed fund rate at this level. 0:09:09.140 --> 0:09:11.409 I think we're exactly on the same page on this. 0:09:11.659 --> 0:09:16.130 If you were to advise Bank of Indonesia since you 0:09:16.299 --> 0:09:18.419 and I both believe that the dollar might have more 0:09:18.419 --> 0:09:21.939 downset ahead, would you advise Bank of Indonesia to reallocate 0:09:21.940 --> 0:09:24.059 some of their dollar reserve to different currency? 0:09:24.809 --> 0:09:27.979 Yes, I think it is very important. Now if you 0:09:27.979 --> 0:09:30.460 look at this is very interesting, this is the new 0:09:30.460 --> 0:09:34.580 development now. Well, probably not, not new development because it's 0:09:34.580 --> 0:09:39.179 also happened during the Trump 1.0. If you look at 0:09:39.179 --> 0:09:42.750 what happened during the Trump 1.0, the gold price also 0:09:43.450 --> 0:09:46.890 soaring at the time, right? Similar to this kind of situation. 0:09:47.179 --> 0:09:49.858 Correct me if I'm wrong, the BIS has just proof 0:09:49.859 --> 0:09:52.539 that gold to be part of the high quality asset 0:09:52.539 --> 0:09:53.500 at this moment, right? 0:09:53.960 --> 0:09:56.880 So looking at this, maybe it is very important to 0:09:56.880 --> 0:10:00.599 sort of like do the diversification of the basket currency, yeah, 0:10:00.719 --> 0:10:02.909 for any central bank all over the world. 0:10:03.750 --> 0:10:07.280 And for the client universe that's sitting here right now, 0:10:07.489 --> 0:10:09.729 would you also advise them to reduce their exposure to 0:10:09.729 --> 0:10:10.559 the US dollar? 0:10:10.969 --> 0:10:13.968 Well, I have to say that if you expect that 0:10:13.969 --> 0:10:16.669 the renminbi will replace the US dollar, this will take 0:10:16.669 --> 0:10:18.929 probably about 10 to 15 years because if you look 0:10:18.929 --> 0:10:21.929 at the share of the renminbi in the sovereign wealth 0:10:21.929 --> 0:10:26.130 fund in the global transaction, it's still pretty small. Euros 0:10:26.130 --> 0:10:29.169 still a very important role. It's about 40% and also 0:10:29.169 --> 0:10:29.780 US dollar. 0:10:30.190 --> 0:10:33.520 But under this kind of situation, I would say that 0:10:33.520 --> 0:10:37.000 the trend of the so-called the deloadization will happen even 0:10:37.000 --> 0:10:40.679 though will not replace the role of the US as the, 0:10:40.919 --> 0:10:43.280 you know, the risks of currency, at least for another 0:10:43.280 --> 0:10:43.988 5 years. 0:10:45.190 --> 0:10:49.710 It's really an extraordinary time, especially with all three major 0:10:49.710 --> 0:10:53.830 ratings agencies having downgraded the US debt outlook. We sometimes 0:10:53.830 --> 0:10:56.960 wonder whether it is better to hold US high grade 0:10:56.960 --> 0:11:00.439 corporate bonds than US government bonds than maybe the debt 0:11:00.440 --> 0:11:04.549 issued by Apple is safer than some of the risk 0:11:04.549 --> 0:11:08.809 associated with US Treasury issuance. Uh, Park Masri, what about 0:11:09.020 --> 0:11:10.728 You just touched a little bit on gold, so let's 0:11:10.729 --> 0:11:13.609 talk about a little bit that whenever there is geopolitical 0:11:13.609 --> 0:11:17.409 uncertainty we have seen in the past, uh, gold related 0:11:17.409 --> 0:11:21.570 demand go up, um, would you see that continuing and 0:11:21.570 --> 0:11:24.729 in addition to gold, gold, we also have this digital 0:11:24.729 --> 0:11:26.358 gold cryptos. 0:11:27.400 --> 0:11:29.700 Well, first of all, I think it is very difficult 0:11:29.700 --> 0:11:32.179 to make a prediction about the geopolitical. 0:11:33.150 --> 0:11:36.710 Uh situation now. The way I look at it, we 0:11:36.710 --> 0:11:41.000 probably cannot entirely explain this current situation through the so-called 0:11:42.229 --> 0:11:47.679 Economic conventional, you know, the, the economic conventional theory, but 0:11:47.679 --> 0:11:50.189 we probably have to look at this issue more on the, 0:11:50.479 --> 0:11:51.599 the Bayesian games. 0:11:52.369 --> 0:11:56.719 Yeah, there are two players, the US and then, and China, 0:11:57.010 --> 0:12:00.209 and then the only one, only one player have the 0:12:00.210 --> 0:12:03.978 perfect information with this US. So the option for this, 0:12:04.130 --> 0:12:07.650 you know, the geopolitical tension, it really depends on the 0:12:07.650 --> 0:12:12.000 move made by the United States. If President Trump bling 0:12:12.000 --> 0:12:14.689 with President Xi, he gave a sort of like a 0:12:14.690 --> 0:12:17.718 signal that he would like to visit China to negotiate, 0:12:17.969 --> 0:12:20.520 then you can see immediately the stock market. 0:12:21.140 --> 0:12:25.349 You know, a rebound, the bond market rebound, so give 0:12:25.349 --> 0:12:27.789 us sort of like a positive impact. But on the 0:12:27.789 --> 0:12:30.229 other hand, one thing that I'm concerned about, I hope 0:12:30.229 --> 0:12:31.439 this is not going to happen. 0:12:32.270 --> 0:12:36.710 One thing that President Xi is perceived by many, that 0:12:36.710 --> 0:12:39.309 one thing that he would like to have for his 0:12:39.309 --> 0:12:41.939 legacy is to have one China. 0:12:42.799 --> 0:12:46.099 And that could be a very dangerous situation because the 0:12:46.099 --> 0:12:48.419 way I look at it, if this happened, 0:12:49.369 --> 0:12:52.608 Then there is a risk of the fragmentation of the 0:12:52.609 --> 0:12:56.770 global financial architecture because probably I don't know whether the 0:12:56.770 --> 0:12:59.809 US will retaliate or give a sanction similar like in 0:12:59.809 --> 0:13:04.329 the case of Russia, then probably in many countries emerging 0:13:04.330 --> 0:13:07.369 developing economies, we have to trade in both renminbi and 0:13:07.369 --> 0:13:11.119 the US dollar and the transaction cost will be very expensive. 0:13:11.530 --> 0:13:14.489 Now back to your question about this, you know, the 0:13:14.489 --> 0:13:15.650 digital currency. 0:13:16.429 --> 0:13:19.819 Honestly speaking, I'm, I'm, I'm not a big fan of this, 0:13:20.030 --> 0:13:22.510 you know, in the sense that the way I look 0:13:22.510 --> 0:13:25.218 at it, I can see there is a role, but 0:13:26.030 --> 0:13:31.460 maybe I always call this, this, this crypto as a, 0:13:31.989 --> 0:13:34.830 you know, as a greenback, you know, in the US dollar, 0:13:34.869 --> 0:13:37.270 there is a word, there is a sentence that In 0:13:37.270 --> 0:13:40.710 God We Trust, similar with the crypto, In God We 0:13:40.710 --> 0:13:42.229 Trust because there is no underlying. 0:13:42.760 --> 0:13:46.199 Right? So it really depends on the, on the supply 0:13:46.200 --> 0:13:49.520 and demand, and I can, uh, it's for me, it's 0:13:49.520 --> 0:13:52.559 hard to imagine this kind of sort of like, you know, 0:13:52.919 --> 0:13:56.689 medium of exchange of sort of value will be the 0:13:56.690 --> 0:13:57.979 replacement for the US dollar. 0:13:59.320 --> 0:14:02.020 Uh, talk to you a little bit about commodities, uh, 0:14:02.239 --> 0:14:06.400 both energy and non-energy commodities. On the energy side, Donald 0:14:06.400 --> 0:14:12.469 Trump is very keen on driving down the price of energy, um, which, uh, 0:14:12.520 --> 0:14:17.400 is probably negative for green transition, but for the near term, 0:14:17.640 --> 0:14:21.960 especially with Indonesia in mind, uh, weak energy price environment 0:14:21.960 --> 0:14:26.380 is bad for commodity exporters. So, do you think it is. 0:14:26.859 --> 0:14:29.979 Sustainable this this 50 to $60 oil that we have 0:14:29.979 --> 0:14:32.659 right now and what does it mean for a country 0:14:32.659 --> 0:14:33.450 like Indonesia? 0:14:33.630 --> 0:14:36.099 Yeah, this is a very good question because at this 0:14:36.099 --> 0:14:39.650 moment you see that there are two competing forces here. 0:14:40.580 --> 0:14:43.859 The first one is we will see the risk of 0:14:43.859 --> 0:14:46.099 the slowdown of the global trade. 0:14:46.849 --> 0:14:49.369 With this will have an implication of the slowdown of 0:14:49.369 --> 0:14:53.369 the global economy, the export, then you would expect the 0:14:53.369 --> 0:14:57.130 negative impact on the oil price in the sense that 0:14:57.330 --> 0:15:01.820 you would expect probably the, the, the oil price will decline, 0:15:02.330 --> 0:15:05.770 but at the same time with the some uh sort 0:15:05.770 --> 0:15:09.690 of like initiative made by the US to. 0:15:10.900 --> 0:15:14.289 Not to say I, I, I would say that probably 0:15:15.099 --> 0:15:18.859 entirely focused on the renewable energy but also exploring the 0:15:18.859 --> 0:15:22.260 possibility of the fossil fuel. There is sort of like, 0:15:22.270 --> 0:15:24.539 you know, a possibility of the. 0:15:25.109 --> 0:15:28.409 A rising oil price. So my answer to this is, 0:15:28.500 --> 0:15:32.409 it really depends on what will be the net effect 0:15:32.409 --> 0:15:36.179 between these two competing forces. In the case of Indonesia, 0:15:36.340 --> 0:15:37.690 this is a very interesting timer. 0:15:38.719 --> 0:15:40.760 Because we are not important at this moment. 0:15:41.630 --> 0:15:45.500 The declining of oil prices somehow will help our fiscal. 0:15:46.280 --> 0:15:49.270 Yeah, so I won't be surprised if by the end 0:15:49.270 --> 0:15:51.929 of the year if the oil price continues between $50 0:15:51.929 --> 0:15:54.869 to $60 US dollars, then you will see maybe the 0:15:54.869 --> 0:15:59.309 budget deficit will stay around 2.4%. So the concern about 0:15:59.309 --> 0:16:02.950 this budget deficit go beyond 3%. I don't think that's 0:16:03.349 --> 0:16:06.900 sort of like something that maybe the investors should worry about, 0:16:07.150 --> 0:16:08.739 especially under this kind of situation. 0:16:10.190 --> 0:16:14.190 Uh, beyond oil, uh, particularly on the natural gas base 0:16:14.190 --> 0:16:16.549 of which Indonesia is a consequential exporter. 0:16:17.609 --> 0:16:21.409 If the US demands that China as part of a 0:16:21.409 --> 0:16:23.570 trade deal would have to buy more LNG from the 0:16:23.570 --> 0:16:28.049 US or in the case of things breaking down, China 0:16:28.049 --> 0:16:31.369 refuses to buy any LNG for the US under those 0:16:31.369 --> 0:16:35.500 two sort of extreme circumstances, one where China-US relationship. 0:16:36.010 --> 0:16:39.690 Gets tighter at the expense of other natural gas exporters 0:16:39.690 --> 0:16:43.289 or it breaks down at the benefit of other natural 0:16:43.289 --> 0:16:46.840 gas exporters. What's your probability assessment of these two? 0:16:47.049 --> 0:16:49.890 Well, let me put it this way, I think Indonesia should. 0:16:50.549 --> 0:16:54.219 Sort of like, you know, should take this opportunity. Let 0:16:54.219 --> 0:16:54.859 me put it this way. 0:16:56.099 --> 0:16:58.719 If you look at our trade balance, trade surplus with 0:16:58.719 --> 0:17:03.479 the US, it's about $19 billion US dollars at this moment, 0:17:03.489 --> 0:17:05.040 18 to $19 billion US dollars. 0:17:05.780 --> 0:17:08.270 And we import oil. 0:17:09.550 --> 0:17:13.349 From Middle East and also Nigeria is about $40 billion 0:17:13.349 --> 0:17:16.979 US dollars. So if Indonesia wants to address this issue. 0:17:17.760 --> 0:17:19.719 One thing that they can do, what, what we will 0:17:19.719 --> 0:17:23.560 do is to import oil, for example, somehow to relocate 0:17:23.560 --> 0:17:26.319 to US. This is part of the negotiation. 0:17:27.020 --> 0:17:31.180 And in addition to that, also related to LNG. 0:17:31.959 --> 0:17:35.909 Yeah, because this is also very important and maybe the 0:17:35.910 --> 0:17:40.149 possibility of Indonesia could be hard for Southeast Asia under 0:17:40.150 --> 0:17:43.619 this kind of situation. So, so we probably have to, 0:17:43.829 --> 0:17:48.709 to observe, you know, about all the possibilities that what 0:17:48.709 --> 0:17:53.140 is happening now and also I, I think that the 0:17:53.150 --> 0:17:55.319 the the name of the game is how to be 0:17:55.319 --> 0:17:58.829 part of this, the US supply chain at this moment, yeah. 0:17:59.900 --> 0:18:03.180 Where we are also observing about the possibility of the 0:18:03.180 --> 0:18:04.689 trade war between the US and China. 0:18:05.849 --> 0:18:09.790 What is your sense of the kind of dialogue the 0:18:09.790 --> 0:18:12.339 Indonesian authorities have so far managed to have with the 0:18:12.339 --> 0:18:13.579 US on this issue? 0:18:14.479 --> 0:18:15.689 I am quite 0:18:16.359 --> 0:18:20.089 Um, optimistic in the sense that because as I said 0:18:20.089 --> 0:18:24.000 to you, our trade surplus is relatively small, it's only 0:18:24.000 --> 0:18:28.300 $19 billion US dollars, and then the, the, the government 0:18:28.920 --> 0:18:33.359 already established the so-called the task force. 0:18:34.260 --> 0:18:38.579 Uh, on this negotiation and to, to the best of 0:18:38.579 --> 0:18:42.459 my knowledge they are working very hard on this to 0:18:42.459 --> 0:18:45.459 come up with some proposals. Yeah, I've got a chance 0:18:45.459 --> 0:18:49.140 to see some people in in Washington about a couple 0:18:49.140 --> 0:18:52.939 of weeks ago and then based on my impression. 0:18:53.599 --> 0:18:56.959 The Indonesian proposal is pretty good, yeah, in the sense 0:18:56.959 --> 0:19:00.920 again because this, this trade surplus is pretty small. The 0:19:00.920 --> 0:19:04.208 only thing that we need to anticipate is. 0:19:05.030 --> 0:19:07.379 I think the main goal for the US is not 0:19:07.380 --> 0:19:11.770 for all the Southeast Asian countries. Their main objective is 0:19:11.770 --> 0:19:12.750 to deal with China. 0:19:13.800 --> 0:19:17.619 Yeah. So one thing that we have to anticipate is 0:19:18.160 --> 0:19:21.829 about once the US-China deal happened, what will be the 0:19:21.829 --> 0:19:25.839 implication for the others, right? This is something that we 0:19:25.839 --> 0:19:26.790 need to anticipate. 0:19:27.040 --> 0:19:29.280 Well, you just wrote my next question. That's exactly where 0:19:29.280 --> 0:19:30.089 I was coming to. 0:19:30.930 --> 0:19:34.000 Um, I was in Washington DC during the spring meetings, uh, 0:19:34.099 --> 0:19:37.459 of World Bank and IMF, and some of the feedback 0:19:37.459 --> 0:19:40.579 that I got from the US side, as well as 0:19:40.939 --> 0:19:43.619 those from Mexico and Canada who have been privy to 0:19:43.619 --> 0:19:46.979 the first round of conversations with US Treasury and US 0:19:46.979 --> 0:19:50.930 Trade Representative's office, was that it is not about creating 0:19:50.930 --> 0:19:54.180 a tariff mode around the US, it is about creating 0:19:54.180 --> 0:19:55.770 a tariff mode around China. 0:19:56.489 --> 0:19:59.989 That many countries will be asked to replicate US tariffs 0:19:59.989 --> 0:20:04.409 and restrictions on China. How can any country in Southeast 0:20:04.410 --> 0:20:05.188 Asia do that? 0:20:05.550 --> 0:20:07.520 This is the thing that we probably have to look 0:20:07.520 --> 0:20:09.669 at carefully for especially. 0:20:11.199 --> 0:20:16.239 For many ASEAN countries, yeah, because one thing that probably 0:20:16.239 --> 0:20:20.719 US will ask is through the so-called the rule of origin. 0:20:21.859 --> 0:20:25.369 So they limit the rule of origin in which that 0:20:26.000 --> 0:20:29.958 China can participate in, you know, any particular product, there 0:20:29.959 --> 0:20:33.919 is a limit of it. So indirectly this will exclude 0:20:33.920 --> 0:20:37.599 China from any countries in Southeast Asia, but of course 0:20:37.599 --> 0:20:40.989 it will come as a cost for Southeast Asian countries, 0:20:41.160 --> 0:20:42.839 and I think this is really the gist of the 0:20:42.839 --> 0:20:47.000 negotiation for any Southeast Asian countries because like it or not. 0:20:48.520 --> 0:20:49.800 China is one of 0:20:50.550 --> 0:20:54.379 Uh, the largest trading partner in Southeast Asia and it's 0:20:54.380 --> 0:20:58.819 not easy for Southeast Asian countries to exclude China. Yeah, 0:20:58.939 --> 0:21:01.459 in fact, the message that we have to convey. 0:21:02.130 --> 0:21:05.199 is with this kind of policy, there is a tendency 0:21:05.199 --> 0:21:09.949 of the Southeast Asian countries will work more closely with China, yeah, 0:21:10.199 --> 0:21:13.079 and then I think it is also very dangerous for 0:21:13.079 --> 0:21:16.430 the Southeast Asian countries to rely too much on China. 0:21:16.719 --> 0:21:20.589 That is why cooperation with the US, investment from the US, 0:21:20.719 --> 0:21:24.250 trade with the US is also very important to maintain 0:21:24.430 --> 0:21:25.709 this geopolitical balance. 0:21:27.359 --> 0:21:32.880 You have spoken about the relatively small impact on Indonesia 0:21:32.880 --> 0:21:35.760 given its limited trade sur visa with the US and 0:21:35.760 --> 0:21:39.800 the largely domestic demand driven nature of Indonesia's economy. But 0:21:39.800 --> 0:21:42.760 then there's second round impacts. If China slows around the 0:21:42.760 --> 0:21:45.919 trade war, if Vietnam slows, if Singapore slows, there's a 0:21:45.920 --> 0:21:47.699 2nd round impact on Indonesia. 0:21:48.170 --> 0:21:51.010 Um, so when you talk about 50 basis points downside 0:21:51.010 --> 0:21:54.689 to your view of 2025 growth, you're taking the second 0:21:54.689 --> 0:21:55.969 round impact into 0:21:55.969 --> 0:21:56.319 account? 0:21:56.489 --> 0:21:59.639 No, this is just a, a direct impact. My estimate 0:21:59.640 --> 0:22:03.380 is 1% decline of economic growth in China. It's probably 0:22:03.380 --> 0:22:06.709 the impact the Tunisian economy is about 0.3%. So if 0:22:06.709 --> 0:22:11.599 you're talking about, you know, after all, the China effect 0:22:11.599 --> 0:22:12.129 as well. 0:22:12.579 --> 0:22:15.270 The economic growth in the worst case scenario will grow 0:22:15.270 --> 0:22:20.719 between 4 to 4.45%. Yeah, but hopefully this has not 0:22:20.719 --> 0:22:23.250 happened because with the possibility of the 0:22:23.979 --> 0:22:27.949 You know, the, the agreement between US and China, I 0:22:27.949 --> 0:22:30.030 hope that this will not happen, but even in the 0:22:30.030 --> 0:22:33.459 worst case scenario, I still believe that the Indonesian economy 0:22:33.459 --> 0:22:37.790 can still grow by about 44.2%, even the direct impact 0:22:37.790 --> 0:22:41.910 to China. As I said, timer, that our export share 0:22:41.910 --> 0:22:46.630 to GDP is relatively small. Don't forget, yeah, during the 0:22:46.630 --> 0:22:50.869 global financial crisis when the global economy plummeted at the time. 0:22:51.619 --> 0:22:55.819 Negative growth in the US in the global economy. Indonesian 0:22:55.819 --> 0:23:00.060 economy still maintained growth 4.6% at that time. So this 0:23:00.060 --> 0:23:04.448 number is probably, you know, won't change so much, yeah, 0:23:04.660 --> 0:23:06.949 a lot compared to what we had back on the 0:23:06.949 --> 0:23:08.060 global financial crisis. 0:23:10.000 --> 0:23:17.489 Can Indonesia have successful green transition, successful introduction of the 0:23:17.489 --> 0:23:22.359