Welcome to hardtalk, with me, zeinab badawi. President widodo of indonesia was recently re elected to a second term in office, and he says he has big ambitions to raise the standards of living for his people. Indonesia is the most populous country in Southeast Asia and has its biggest economy, but it faces a series of challenges, from poor infrastructure to corruption and extreme income inequality. My guest is indonesias minister for National Development planning, bambang brodjonegoro, who is here in londodn trying to attract investors. But is the government doing enough to tackle its problems . Minister bambang brodjonegoro, welcome to hardtalk. Thank you, zeinab. So, here you are in london trying to attract investors to your country. What message are you giving them . I think the first one must be the size of our economy and the population as well. 216 million population, with gdp more than us i trillion currently. But in 2045, 100 years of independence, it will be 320 million, with gdp of about us 7 trillion. So, a big opportunity so looking at the future. So, come to us because we are big, but you also have a lot of problems, lets be honest here. Ijust cite one example. Last year, the Us Department of commerce had a report advising american businesspeople, and it said look, indonesia in a World Bank Report last year ranked 72 out of 190 countries in the ease of doing business. And it said us firms encounter complex regulatory requirements that make it time consuming to enter the market, laws are often opaque or conflicting. That doesnt sound very good. Yeah, we admit that our investment growth is lower than our expectation. And i think most problems are lying on that issue. But for the next term of president widodo, the priority will the bureaucracy reform and cutting all the red tape bureaucracy for investment. But its notjust that, its corruption also. The same report cited corruption remains a concern for many businesses looking to operate within indonesia. And, you know, there are many examples i could give. A more recent one is thatjakartas anticorru ption Court Sentenced a former widodo cabinet minister, idrus marham, to three years in prison over a case involving a state owned power plant in riau province. This kind of thing doesnt look good. Yeah, we understand that corruption is still not gone from indonesia, but we always promote anticorruption, we always support anticorruption action. In fact, the reason why one of the ministers under president widodos first cabinet issued a sentence shows the commitment of the president himself, that everyone is subject to theirjurisdiction. What are you doing, though . Because its all pervasive. A Transparency International report says a large number of the population reporting having to pay bribes for services. Political corruption is particularly pervasive, and parliament is widely considered the most corrupt institution. Youve got a lot of cleaning up to do. What are you doing . Yeah, sure. It has to start with reducing the costs involved in doing politics. I think the root of the problem is high costs to be involved in politics. Being a legislative member as well as being governors or mayors. So thats the root of the problem, and then we let the National Anti Corruption Commission to work, so they can do whatever they want as long as it can reduce corruption. So we are not talking only about the action but with the prevention of corruption itself. So when you attend these Investment Forums all over the world as the minister for National Development planning, you say, everybody, we are doing everything we can to root out corruption in politics and economics, everywhere in indonesia. Yeah, i think the main message whenever i go to an Investment Forum will be to make sure all the process will not go through the long and bureaucratic procedure. Instead, we set up a special institution dealing only with the investment, so any investor doesnt have to worry about being involved in political corruption or any red tape bureaucracy. So we know that indonesia is Southeast Asias biggest economy, and you have to grow by about 6 in order to meet the needs of your people, its just over 5 at the moment. And the world bank has applauded your efforts in indonesia, trying to reduce income inequality. But the fact of the matter is, as we know from the 0xfam report, that indonesia is the worlds sixth most unequal country. You have the largest income inequality. That is a terrible indictment on all the governments efforts in your country. Yeah, thats why our priority in reducing income inequality has to start with reducing poverty, especially extreme poverty. And so far, president widodo is the first president that has been able to bring our poverty rate below 10 . So you can imagine, indonesia still has close to 10 of poor people, meaning almost 26 million, so that is the reason why inequality is very high. You say 26 million, but its actually more than that. A World Bank Report from 2015 says, growth over the past decade has primarily benefited the richest 20 and left behind the remaining 80 of the population. Thats about 200 million people. But dont forget, thats the first year of president widodo, so we inherited what happened in the past. So after that, president widodo give the emphasis that we need to reduce the poverty. Thats why. Its the first time indonesia has a poverty rate below 10 . And thats the formulation to reduce inequality. In fact, in 2015, when we just started the first term, the inequality, in terms of gini ratio, is more than 0. 4, which is kind of intolerable. So hes tackling it . Its a big priority for him . Now the gini ratio inequality is 0. 384. So its going down. One big factor thats a real challenge for you is that there are many people in indonesia who have low wages, and im thinking in particular here of the manufacturing industry, which accounts for about a fifth of indonesias gdp. Now, there was an investigation by the british newspaper, the guardian, in 2017, and it said the reality of working in one particular factory making clothes for an American Fashion label has been laid bare, with employees speaking of being paid so little they cant live with their children, theres the existence of anti union intimidation, impossibly high production targets and sporadically compensated overtime. Yeah, i think the root of the problem is relative to the quality of Human Resources themselves. If you look at our labour force, more than 50 are only graduates from secondary school, elementary or secondary school, meaning that in terms of productivity, they are fairly low. Once you have low productivity, then of course you cannot get the high wages. Its not high wages, its unfair wages. This report says that theyre not even being compensated for overtime. Im talking about the fair wage. One thing weve done is to have a formula to adjust the minimum wage, which is very important. And the minimum wage should reflect the basic needs of daily life, especially in urban areas in indonesia. But the second thing is improvment of the quality of the labour itself, notjust in education but also skill. If you can improve the skill you can get higher productivity, and then it will be easier to get fair wages, or even higher wages. So, we have things to complete in the first five years, and the second five years, the president already emphasised, improving the labour force, Human Resources, will be the top priority. Can you say there are no sweatshops then in indonesia at the moment . Yeah. You cant say that, can you . Well, i think foreign manufacturing now, for labour intensive, we still have the problem to make sure labour get the fair wages. But if youre talking capital intensive manufacturing type, they dont have any problem with the wages because usually they only hire productive workers. But thats an extremely tragic situation, isnt it . Especially for the people who work in these sweatshops, and the large number of them are women. Well, i think now the protection of the labour is much better than before. We have the pension fund scheme, we have Health Insurance thats also intended for the workers, aside from the poor people. What about protection for the approximately 4. 5 million Migrant Workers who are from indonesia, who are working in countries like malaysia, singapore, hong kong, saudi arabia, the vast majority of them, 70 , are women, mostly working in the domestic sector. And we hear, dont we, periodically cases of abuse, a recent one about a young indonesian woman, a maid, adelina sau, who was allegedly starved, tortured and left to die outside her employers home in malaysia. What are you doing to protect these woman workers . We understand the issue about abuse. Thats the reason i think a couple of years ago during this government, we did a moratorium on sending woman migrants to the middle east. So, thats the first step, because we know in the middle east there are a lot of cases involving our Migrant Workers. Its notjust the middle east though, this was in malaysia. Yeah, but the bigger group is middle east. The one in malaysia, we are trying to solve it bilaterally with the government to make sure that our representative consulates and embassies can do better protection. And we also have a special institution in indonesia to deal with this Migrant Worker safety. For other parts of the world, we heard that conditions are much better. So we focus now on middle east and malaysia. Migrant workers could be a really big problem for you that youre going to have to grapple with. Youve already got an Unemployment Rate of just over 5 in your country. The risks of automation in indonesia, as well as many other manufacturing nations in the region, is a very real one, and its going to put a lot of people out of work. So many studies say this, perhaps as many as 64 of workers in the textile clothing manufacturing sector. So what are you going to do . Whatjobs are you going to be able to provide . There are two types ofjobs that could substitute the possibility of missing the jobs itself. Number one, the digital economy, or industry 4. 0, will make economy more efficient, so it will be higher growth and with higher growth you can create newjob opportunities. It doesnt have to be in the same sector as you mention, but also in other sectors, and could create new types ofjobs. Secondly, there are types ofjobs that if you have more skills then you can survive automation. We identify the type ofjobs that will survive because of automation, but in order to cope with that, you have to have higher skill, and thats why in the next five years we are going to focus on vocational training, the missing link of our quality of labour force. So, looking at the labour force, i mean, obviously construction is another big sector in indonesia, and you have this 400 billion infrastructure plan for your country, but im thinking in particular of the fact that there are many, many Chinese Workers working on chinese funded indonesia, and this was something that was raised in april when president widodo was re elected, his rival, prabowo subianto, accused mr widodo of being too soft on china. Yeah, i think most of the news about the Chinese Workers are considered as a hoax and its proven to be a hoax. There were no Chinese Workers in indonesia . Of course not every single one, but there are not as many as people on social media are trying to say. They talk about millions and millions, no. Not millions, maybe thousands. Even if there are thousands of Chinese Workers, what i understand because i follow Infrastructure Projects in quite detail, they only come for a certain period. So, for example, you build a power plant, and there is a critical period, lets say on the second or third year, in which you need to have more skilled workers in order to accelerate the completion. In that period, then they bring more skilled workers. Unfortunately, sometimes we dont have enough skilled workers to cope with the acceleration, so they come only for the period. After that, they go home. You can see that during the operation it is already tackled by the indonesians. What can you do with your relationship with china . I said that was a factor in the president ial election and you are relying on loans from china. That i have to correct you. China is not on the radar of the Top Countries giving loans to indonesia. They are not even in the top five. They are even below countries like germany and france. But it is moving up. Isnt it . If i see the total amount, it is quite small, actually, because we are trying to encourage china to participate through investment, not through financing. It is more through Equity Financing rather than Debt Financing. Tom lembong, the head of the indonesian Investment Co ordinating board said traditionally the source of investment has been japan and korea. I do have to note, he says, over the last five years china has gone from number 13. But it is investment, right. It has gone up. It is not a loan. That is investment. Equity financing rather than Debt Financing. Have you notjust obtained a big loan of about 5. 5 billion from the China Development bank, a state owned policyholder . So you have that. But again. We have to the data about the source of loan and i have to assure you again that the top five is the world bank, adb, japan, france and germany. So china is still not on the radar although they increase. So our strategy is to limit the Debt Financing from china and instead we force them to do more Equity Financing. Investment. There is the jakarta Bandung High Speed Railway being built by a Chinese Consortium and local partners. Why are you trying to limit chinese activity, though . What is the reason . We do not limit. We just do not want to be trapped in a debt problem. And you think china might lead you into that . With anybody, no, with anybody. So we limit the Debt Financing from japan, we limit the financing from Multilateral Development banks like the world bank. China is special, isnt it, minister bambang. China is a big presence in your part of the world and you have the problems in the South China Sea where countries like the philippines are very nervous about chinese activity there and all the claims about, you know, the various territories and so on. So what is indonesias china policy . How do you balance your need for some Chinese Investment but also try to say, well, we understand the concerns of our neighbours. We welcome very much their investment, 0k . Equity financing not Debt Financing. That is why we need to limit the Debt Financing possibility. Second one. Because it is part of macroeconomic policy. Secondly, in regards to the South China Sea, fortunately indonesia is not the party having a conflict with china and, number two, we try to maintain our sovereignty so we always have problem with Illegal Fishing, including from china, not only from china but from other neighbours. We always try to be strict. Illegalfishing is a big no, so we have to deal with this Illegal Fishing and we do it bilaterally with china. But looking at the region as a whole, i put to you that the former foreign minister, marty natalegawa, urges indonesia to step up its leadership in asean and in navigating this difficult course with china. Is indonesia doing enough . In its role as a leader in asean . We are doing enough, trying to maintain the peace and stability in the South China Sea by trying to build or trying to facilitate more constructive discussion between our colleagues in asean and china. For example, although you mentioned that the philippines may have had some tension, but i notice lately that there are now more and more Chinese Investment in the philippines. Economically they are doing 0k, even now with vietnam in the trade war, china is also working with vietnam. So i think using the economic approach will somehow neutralise the possibility of conflict in the South China Sea. So here you are in europe, trying to woo investors in london but you have a problem with the European Union at the moment. The fact is that indonesia is the Worlds Largest Palm Oil Producer and the eu is seeking to ban its sales with you because it is concerned about the way you produce palm oil and it says that rainforests are cleared to produce palm oil for use in biofuel. This will be a big problem for you. We have done our homework. First, a moratorium of any expansion of Palm Oil Plantations in indonesia has been in effect for a couple of years. Secondly, we understand that this is not about the environmental issue. This is like any traditional trade war. You have, in europe, some commodities that may be less competitive to palm oil and you are trying to protect your commodities. So you say it is about eu protectionism. But greenpeace, an ngo, says on deforestation, indonesia has already lost 72 of its intact forest. This threatens habitat of species like the Sumatran Tiger and orangutans and how many people who depend on the forests for food and shelter. Firstly, we are now trying to protect our forest. We are now doing reforestation and stopping deforestation. Of course it could be considered too late but better late than never. We have done something. We did a moratorium for palm oil and we are trying to do ourjob. So you can grow your economy and continue with Palm Oil Production without damaging the environment. And we understand that again, this is about a trade war. You take retaliatory measures against the eu . I dont think we have to do. We should be able to take a constructive approach to resolve the issue. I think everybody should get a win win situation rather than a win lose situation. Post brexit will you lobby the uk for palm Oil Concessions . We have not talked about that to the uk specifically. We are more on the. What is it . Timber products in which we have successfully achieved agreement with the uk for exporting certified Timber Products from indonesia. Talking of sustainability, you have decided in your government thatjakarta is no longer sustainable as the capital of indonesia. Far too much traffic and the environmental problems, it is polluted and sinking, so on and so forth. You are wanting to move it to the island of borneo, not sure yet. Butjava, where jakarta is, is the largest archipelago, it generates about 58 of gdp and you will put your capital somewhere really isolated . Not at the centre of the country . The movement willjust be for government administration. So jakarta, in the future will still be our capital of business, finance and trade, services. So most Economic Activities will be from jakarta. If you mentionjawa is the biggest, yes, 58 of gdp and 57 of our population. But unfortunately the environment ofjava is no longer capable to support that kind of Economic Activities. And on the other side, outsidejava, is left behind compared to java. So we need to create one of the economic sources of growth. 0ther islands and kalimantan happens to be. That is borneo in your language. So that is borneo. Kalimantan, yeah. I must ask you about terror because, of course, we saw injakarta in 2017 a couple of terror attacks and more recently in surabaya. And everybody remembers the bombings in bali, of course. That can put off investors and tourists and you rely a lot on tourism revenue, especially from bali. What can you reassure people out there and say, look, indonesia is on top of this terror problem. First of all, our police force and military have already worked cooperatively and in the full capacity to deal with potential threat at an early stage. So finally, despite all these challenges, you say to investors that indonesia is open for business . Indonesia is very much open for any investment, for infrastructure and for manufacturing and services especially on tourism. Minister bambang brodjonegoro, thank you very much for coming on. Hello there. If youre hoping for warm weather, it might be worth sticking around until the end of this forecast, but in the meantime, some soggy weather to get through during the day ahead. This frontal system sliding in from the south west, this is going to bring some outbreaks of pretty heavy rain northwards across many parts of the uk, and with that, a brisk breeze. That rain very quickly getting into South West England and the south of wales through the morning. Many other spots starting the day dry and clear, but through the rush hour, some very heavy rain falling across parts of the west country and particularly south wales could well be some surface water and spray on the roads, some very poor travelling conditions, perhaps some disruption. But as we drift further north, across northern england, Northern Ireland and scotland, many places starting the day dry with some spells of sunshine. 14 degrees there in glasgow, with a scattering of showers across the north of scotland. Now, as we go through the day, this band of rain, perhaps with the odd flash of lightning, the odd rumble of thunder, will move its way northwards across the midlands, east anglia, up into northern england, creeping into Northern Ireland, getting into southern scotland, perhaps into the central belt by the middle of the afternoon. Some showers chasing on from the south. The best of the dry weather, albeit with one or two showers, across northern scotland. Some sunny spells here, temperatures of 19 21 degrees. Now, on the southern flank of this rain band, there could be some thunderstorms breaking out across the far north of england, the far south of scotland through friday evening. Another batch of wet weather sliding across southern parts of england. Generally speaking, across the south east of the uk its going to be a muggy night, a muggy start to saturday morning. A little cooler and fresher across the north west. Now, the main body of the wet weather tied in with this frontal system here will be sliding eastwards as we get into saturday, but low pressure still very much in charge. So yes, there will be some spells of sunshine, but also a scattering of showers, and some of those could be heavy, could be thundery, could crop up just about anywhere, but especially for central and eastern areas. Temperatures 20 24 degrees, beginning to creep upwards again. Split fortunes on sunday england and wales having a predominantly dry day, increasing amounts of cloud, some sunny spells, but well see rain across Northern Ireland spreading into the western side of scotland. Temperatures down towards the south may be into the middle 20s at this stage, but they will climb a little higher, i suspect, because early next week, heat will really be building across iberia and france. Some spots up to 40 degrees, and that heat looks like getting drawn into at least the southern half of the uk. Some spots into the low 30s celsius, but further north, itll be cooler and more unsettled as well. Whole welcome to newsday on the bbc. Im rico hizon, in singapore. The headlines President Trump seeks to distance himself from racist chanting, ta rgetting a somali born democratic congresswoman, at Wednesdays Campaign rally. I was not happy with it. I disagree with it but, again, i did not say i didnt say that, they did. The death toll from an arson attack on a japanese Animation Studio rises to at least 33. Dozens more are injured, some critically. Im samantha simmonds, in london. Also in the programme
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