Interview: Suryo Sulisto
What should be done to address the growing trade deficit with China and its potential impact on jobs?
SURYO SULISTO: Indonesia needs to better manoeuvre itself in relation to China. Essentially, we need to level the playing field between our two countries so that Indonesian businesses can compete more effectively.
Currently, China enjoys a significant advantage as their business environment is much more advanced. They benefit from lower interest rates and a highly developed infrastructure system, resulting in significantly lower logistics costs. It is important that we continue to focus on improving our own manufacturing capacity so that we can reduce our dependency on cheap Chinese imports. It is also important that we develop the infrastructure necessary to access the natural resources that China imports, especially in our mineral reserves.
Finally, the main focus should be on increasing trade between our countries such that jobs will be created. The memorandums of understanding and agreements that were signed earlier this year during Chinese Premier Wen Jibao’s visit to Indonesia indicate that the motivation is there; we just need to capitalise on it.
What kind of relationship does KADIN have with regional and district authorities to encourage them to formulate the right policies to attract business?
SULISTO: Local KADIN offices are responsible for establishing effective relationships with local government units. At the national level, the KADIN secretariat works closely with ministries and agencies, providing advice on policies and programmes that affect business. More specifically, as it relates to regional development, we will focus our efforts to help address infrastructure-related challenges by working with the government at both the national and local level.
It is our assessment that the current state of infrastructure is the key impediment to attracting investment. In order to address the issue, we feel that the limitation in the availability of long-term financing is the main factor hindering development. KADIN has proposed the establishment of a development bank that will provide this kind of specialised financing. We are working with the government to determine the best way to make this happen, while the World Bank is providing useful examples from other countries so that we can apply international best practice.
The establishment of this bank, which will feature lower interest rates, should also encourage other banks to reduce their own rates. We also need to focus on the transparency of the bidding process. Investors need to feel that they are treated fairly and the process is not rigged from the beginning. If we are able to develop an open and transparent process, then the need for sovereign guarantees will be reduced.
What strategies is KADIN pushing the government to implement in order to fight for the interests of small and medium-sized enterprises (SMEs)?
SULISTO: KADIN has been implementing programmes to boost the role of SMEs for several years. Our programmes are based on a strategy of strengthening SMEs through the establishment of official access to sources of funding, access to technology and access to markets. We believe that once those three connections are established, SMEs will become a stronger force within the national economy.
One strategy is to approach the government to consider new polices that promote SMEs. For example, they could instruct state-owned enterprises and local governments to become more open and provide opportunities to SMEs. More importantly, Indonesia needs to keep expanding and improving its education system.
If Indonesian entrepreneurs are to compete against global products and services, they need to have a much higher level of education that gives them the basic tools to be able to identify opportunities and pursue them. The need for these tools starts as early as primary school, learning the fundamentals of maths and writing, and continues through specialised training programmes at the post-secondary levels of education.
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